India’s retail inflation cools to 6.83 pc amid a decline in vegetable prices  

Retail inflation in India eased to 6.83 per cent in August after reaching its peak in 15 months at 7.44 per cent in July as vegetable prices fall, in a major relief to India’s central bank and bond investors.

However, inflation as measured by the Consumer Price Index (CPI) continued to remain over the RBI’s (Reserve Bank of India’s) target range of 2-6 per cent.

Retail inflation was predicted by 18 experts surveyed by Mint to drop to 7 per cent in August.

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According to data provided by the ministry of statistics and programme implementation (MoSPI) on Tuesday, food inflation, as assessed by the Consumer Food Price Index, which makes up roughly half of the total consumer price basket, fell to 9.94 per cent in August from 11.51 per cent in July.

Vegetable prices led the decrease in inflation, which was also moderated by costs of housing, clothing and footwear, and other non-essential commodities.

According to a statement from MosPI, the inflation data was gathered from selected 1,114 metropolitan markets and 1,181 villages across all states and union territories.

“During the month of August, NSO (National Statistics Office) collected prices from 99.6 per cent of villages and 98.3 per cent of urban markets, while the market-wise prices reported therein were 88.8 per cent for rural and 91.3 per cent for urban,” Mint cited the statement from MoSPI.

“Within food items, inflation in vegetables fell to 26.1 per cent in August 2023 from 37.4 per cent in the previous month, contributing as much as 28 basis points (bps) of the 61bps decline in the headline CPI inflation print between these months. Notably, the year-on-year (y-o-y) inflation prints in seven of the 12 food segments in the food and beverages index witnessed an uptick in their y-o-y print in August,” Mint quoted AditiNayar, chief economist at Icra Ltd, as saying.

However, analysts are keeping a vigilant track of oil, pulse, and wheat prices.

Nayar further mentioned that good rainfall during the remainder of September could ensure that kharif yields in control.

At 4.8 per cent, core inflation remained true to the market forecasts.

The RBI maintained the repo rate at 6.50 per cent last month after blaming a demand-supply imbalance for the recent surge in vegetable prices.