India’s Retail Inflation Below RBI Target for Second Month

Retail inflation in India remained below RBI's 4% target for the second consecutive month, with August recording a Consumer Price Index of 3.65%. Food prices, however, continue to challenge policymakers despite the eased inflation. The repo rate has been unchanged for the ninth straight occasion to counter inflation.

India's retail inflation remained below the Reserve Bank of India's (RBI) target of 4% for the second straight month. According to the Ministry of Statistics and Programme Implementation, the Consumer Price Index (CPI) in August stood at 3.65%, marking the second-lowest rate in the last five years.

The All India Consumer Food Price Index (CFPI) showed a year-on-year provisional rate of 5.66% for August 2024. Notably, rural areas experienced a 6.02% inflation rate, while urban areas recorded 4.99%. Significant declines were seen in subgroups including 'Spices,' 'Meat and Fish,' and 'Pulses and products.' 'Tomato' prices notably decreased by 47.91% year-on-year.

After breaching 5% in June, retail inflation softened to 3.54% in July. The downward trend continued into August, corroborating the RBI's decision to keep the repo rate steady for the ninth occasion. Despite challenges in the food segment, where inflation rates saw significant rises, India has managed its inflation trajectory more effectively than many advanced economies.

(With inputs from agencies.)