Indian Retail Inflation Down In August

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Indian Retail Inflation Down In August

Indian Retail Inflation Down To 6.83% In August

During the month of August, the retail inflation in August went down a notch as a moderation in the food prices was witnessed. However, the inflation is still higher than the upper target range set by the Indian central bank.

As a result of the higher inflation in India, the policymakers have adopted a watch-and-wait policy to see the effects of their past actions.

In August, the retail inflation's annual rate was near 6.83%, which is below July's rate of 7.44%. For the most part, several economists were forecasting the retail inflation be around 7% in August. So on that front, inflation is showing signs of a slowdown, which is beneficial for the Indian economy.

Food Inflation Remains Elevated

The bulk of the inflation is driven by food inflation which was around 9.44% during August. In July, the food inflation jumped by 11.51%, which signals a refreshing change.

According to one economist, the CPI inflation going below the range of 7% has offered some relief to consumers. The cooldown in inflation can be attributed to a drop in the vegetables, footwear, and clothing items.

For the policymakers, one of the biggest concerns is the food prices which went higher last year due to bad weather conditions.

Despite the recent drop in inflation, it is still above the Indian central bank's target of 2% to 6%. The upper range is set near 6% while the actual inflation is hovering around 6.83%.

Just a month ago, the RBI governor said that they continue to watch the inflation as it evolves over time. He also added the vegetable prices have experienced a spike which is not good at all.

During July, the inflation of vegetable items was 37.34% which went lower in August to around 26.14%. Despite the slowdown, it is still at elevated levels considering vegetables make up bulk of the Indian population food.

In an attempt to control the domestic inflation, the Indian officials have already banned the exports of white rice to other countries. In addition, a 20% exports duty was also put on barbiled rice while the onion exports received a tax or 40%.

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