Retail inflation declines marginally to 9.86% in July

The Consumer Price Index (CPI) data released today revealed that vegetable prices recorded the maximum spurt, up 27.33 per cent, followed by edible oils (17.37 per cent) and pulses and its products (12.49 per cent) in July against the same month last year

The retail inflation for June too has been revised downwards to 9.93 per cent from the earlier 10.02 per cent. Retail inflation in May was 10.36 per cent.

Prices of egg, fish and meat shot up 11.11 per cent, while non-alcoholic beverages became costlier by 9.26 per cent in July. Among other items, prices of cereal and its products saw a rise of 6.45 per cent over the July 2011 level.

While sugar saw an increase of 9.06 per cent in July, price rise in food and beverages, clothing, bedding and footwear segments remained in the double-digit.

Nomura Financial Advisory and Securities (India) opined the moderation in July CPI inflation, like the fall in July WPI inflation, may not be sustainable.

This is because food prices will likely continue to rise because of poor rainfall and fuel inflation remaining suppressed due to an incomplete pass-through of fuel prices to end users, besides other factors.

The inflation measured by WPI had also declined to 6.87 per cent in July from 7.25 per cent in the previous month.

Marginal decline in retail inflation, however, is unlikely to prompt Reserve Bank to cut interest rate at its next credit policy review on September 17.

Economist with HDFC Bank Jyotinder Kaur said food prices are expected to go up further as the impact of drought has to be factored in with the harvest of summer crop in September. (more)