 |
|
India's retail inflation edged up to 3.65% in August, a slight increase from 3.6% in July, but remained within the Reserve Bank of India’s (RBI) target of 4%, according to government data released on Thursday. This marks a significant drop from the 6.83% recorded in August 2023, indicating a continued easing of inflationary pressures in the country.
The rise in retail inflation was primarily driven by a marginal increase in food inflation, which rose to 5.66% in August from 5.42% in July. This increase in food prices, though small, is a factor to watch, as food prices have a significant impact on overall inflation and household budgets. The government has tasked the RBI with maintaining retail inflation at 4%, with a margin of 2% on either side. Despite the rise, inflation remains well under control compared to last year’s levels.
Despite the easing of inflationary pressures, experts believe the RBI will maintain its current policy rate for now. The central bank’s stance and forward guidance are likely to turn more dovish, signaling potential future easing. This decision is influenced by factors like lower-than-expected GDP growth for the quarter ending June 2024 and the likelihood of a rate cut by the US Fed. The anticipated hardening in inflation in September 2024, however, is expected to be temporary, with the average CPI inflation for the quarter undershooting the MPC’s target.
The government and the RBI remain vigilant in monitoring inflation and are prepared to take appropriate measures to ensure price stability. The continued easing of inflationary pressures and the RBI's commitment to maintaining price stability provide a positive outlook for the Indian economy. However, it is essential to keep a close watch on global developments and their potential impact on domestic inflation in the coming months.
Source: Retail inflation inches up slightly to 3.65% in August but stays within RBI target