India’s Retail Inflation Stays Below 4% for Second Month in a Row
New Delhi, India – India’s retail inflation remained below the Reserve Bank of India’s (RBI) 4% target for the second consecutive month. According to data released by the Ministry of Statistics and Programme Implementation, retail inflation or Consumer Price Index (CPI) in August was at 3.65%. This is the second lowest rate in the last five years.
The year-on-year inflation rate based on the All India Consumer Food Price Index (CFPI) for August 2024 is 5.66%, with rural areas at 6.02% and urban areas at 4.99%. The decline in inflation was observed in subgroups like ‘Spices’, ‘Meat and Fish’, and ‘Pulses and products’. Notably, ‘tomato’ exhibited the lowest year-on-year inflation at -47.91%.
In June, retail inflation rose to 5.08% due to rising food prices but softened drastically in July to 3.54%. Food inflation had almost doubled in June to 8.36% compared to 4.63% in June 2023. Policymakers aim to bring retail inflation to 4% sustainably, and the current data reaffirms alignment with this target.
Annual retail inflation in May was at a 12-month low of 4.75%, slightly down from 4.83% in April. The RBI has maintained the status quo in the repo rate for the ninth straight occasion, having raised it by 250 basis points since May 2022 to combat inflation. The repo rate is the interest rate at which the RBI lends to other banks.
Doubts Revealed
Retail Inflation -: Retail inflation is the rate at which the prices of goods and services bought by households increase over time. It affects how much you pay for things like food, clothes, and other daily items.
Reserve Bank of India -: The Reserve Bank of India (RBI) is the central bank of India. It manages the country’s money supply and interest rates to keep the economy stable.
4% target -: The 4% target is the goal set by the RBI for inflation. It means they want to keep the increase in prices around 4% to ensure the economy is healthy.
Repo Rate -: The repo rate is the interest rate at which the RBI lends money to commercial banks. Keeping it steady helps control inflation and manage the economy.
Food Inflation -: Food inflation is the rate at which the prices of food items increase. When food inflation drops, it means food prices are not rising as quickly.
Tomatoes -: Tomatoes are a common vegetable in India. A sharp decline in their price means they have become cheaper, which helps lower food inflation.
Policymakers -: Policymakers are people in the government or central bank who make decisions to manage the economy. They try to keep inflation and other economic factors stable.
