look news india
Government data released on Monday showed India's retail inflation fell to a nearly five-year low in July as base effects pushed food prices off previous highs. Annual retail inflation stood at 3.54 per cent in July, compared with 5.08 per cent in June. The latest print is the lowest since August 2019.
Economists polled by Reuters had forecast inflation at 3.65 per cent based on the higher print in July last year, when inflation hit a 15-month high of 7.44 per cent. Retail inflation remained below the RBI's target of 4 per cent mainly due to the high base effect.
According to the data of the National Statistical Office (NSO), the inflation rate of food items was 5.42 percent in July. It was 9.36 percent in June. Earlier in September 2019, the retail inflation rate was below four percent.
The government has given the responsibility to the Reserve Bank to keep the retail inflation rate at four percent with a variation of two percent. After the softening of the retail inflation rate, a decision to cut interest rates can be taken in the next policy meeting of the Reserve Bank.
The central bank definitely takes into account the retail inflation rate while changing the policy interest rates. In such a situation, it can be said that the decline in retail inflation in July is a positive sign. However, it would be premature to say that inflation is completely under control.
