At 5.3%, retail inflation softens to 4-mth low

India CPI Inflation Rate August 2021: The retail inflation which is measured by the Consumer Price Index (CPI) was 5.59 per cent in July, government data revealed.

People at Dadar Vegetable Market near Dadar station (Express Photo by Prashant Nadkar)

Retail inflation based on Consumer Price Index (Combined) eased to a four-month low of 5.3 per cent in August due to moderation in food prices along with a high base effect, data released by the National Statistical Office (NSO) on Monday showed. Supply-side improvements aided a lower core inflation print while lower cereals and poultry prices helped ease food inflation to 3.11 per cent in August from 3.96 per cent in the previous month.

CPI inflation rate was recorded at 6.69 per cent in August 2020 and at 5.59 per cent in July this year.

The August inflation print is within the targeted range of 2±4 per cent of the Reserve Bank of India (RBI) though this is the seventh consecutive month of an inflation print higher than 5 per cent and 23rd consecutive month of it being above the RBI’s target of 4 per cent. Economists said the RBI will maintain its pause mode for this fiscal though it may revise down its inflation forecast.

“… Inflation is expected to fall at least till November 2021 due to base effect and in 3QFY22, it is expected to decline to closer to RBI’s targeted 4 per cent level. However, in 4QFY22, it is expected to rise again. Ind-Ra believes RBI will remain in pause mode for the rest of FY22,” said Sunil Kumar Sinha, principal economist, India Ratings.