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Lower food prices cool India's July retail inflation to 4.17% (Roundup)

IANS  |  New Delhi 

prices eased India's July retail to 4.17 per cent from 4.92 per cent in June, even as it continued to rule over the of (RBI)'s medium-term target of 4 per cent, official data showed on Monday.

However, on a year-on-year (YoY) basis, the Index (CPI) in July 2018 was higher than in the corresponding period last year, when retail stood at 2.36 per cent.

According to the data furnished by the (CSO), the Price Index (CFPI) rose 1.37 per cent in July from 2.91 per cent in June 2018.

Product-wise, prices of milk-based products, eggs, meat and fish pushed the higher on a YoY basis.

In contrast, deflation in the cost of vegetables, pulses and sugar capped the prices.

Accordingly, the prices of milk-based products rose by 2.96 per cent, while cereals became dearer by 2.92 per cent and meat and fish prices recorded a rise of 2.26 per cent.

On the other hand, the category of "pulses and products" became cheaper by (-) 8.91 per cent and that of "sugar and confectionery" by (-) 5.81 per cent.

The sub-category of food and beverages during the month under consideration recorded a rise of 1.73 per cent over the same period last year.

Among non-food categories, the "fuel and light" segment's inflation rate accelerated to 7.96 per cent in July.

Continuing with the reversal of accommodation begun in June, the RBI earlier this month again hiked its key lending rate by 25 basis points to bring the repo to 6.50 per cent citing upside risks to inflation.

Addressing the media on the hike in the repo, or the short-term lending rate for commercial banks, said its committee (MPC) noted that the rise in had continued for the third consecutive month.

"The decision of the MPC is consistent with the neutral stance of in consonance with the objective of achieving the medium-term target for index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth," the RBI said.

The central bank, however, maintained its "neutral" stance on policy, as it has done over five previous bi-monthly policy reviews which allows it to move either way on rates.

Commenting on the CPI numbers, Lead Economist said in a statement: "Inflation continued to remain fuelled by as increasing levels of core inflation, especially housing, clothing, and miscellaneous activities. The movement in has also increased and is likely to follow an upward trajectory due to MSP increase."

"Given that inflation remains above the medium term target of 4 per cent and the scales are tilted to the upside, the recent increase in key policy rate may provide some respite," he added.

--IANS

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, August 13 2018. 21:44 IST
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