“India’s Retail Inflation Eases to 6.83% in August as Food Prices Decline”
India’s annual retail inflation has decreased to 6.83% in August from July’s 15-month high of 7.44%, driven by a moderation in food prices. This development comes as welcome relief for policymakers grappling with food inflation caused by erratic weather conditions.
India’s annual retail inflation witnessed a welcome decline in August, falling to 6.83% from a 15-month high of 7.44% in July, according to government data released on Tuesday. This dip in inflation rates has been primarily attributed to a moderation in food prices, providing some respite to policymakers who have grappled with the issue of rising food costs.
Mitigation of Food Inflation
Food inflation, which constitutes nearly half of the overall consumer price basket, showed signs of moderation in August, registering an increase of 9.94%, compared to the previous month’s rise of 11.51%. This drop in food prices is significant, considering that food costs have been a persistent concern for policymakers since last year.
The erratic weather conditions, including droughts and unseasonal rains, have adversely affected the output of key agricultural commodities such as vegetables, milk, and cereals, contributing to the upward trajectory of food prices.
Caution from the Reserve Bank
The recent reduction in inflation rates aligns with the Reserve Bank of India’s (RBI) concerns. In the face of rising food prices, RBI Governor Shaktikanta Das had previously expressed his apprehensions about food price shocks posing a risk to the “anchoring of inflation expectations.” He emphasized the central bank’s commitment to closely monitor the situation.
Persistent Inflation Challenges
India’s inflation rate has remained above the central bank’s target range of 2%-6% for seven out of the last 12 months. This extended period of inflationary pressures has prompted policymakers to employ various measures to stabilize prices and ensure economic stability.
As food prices continue to be a crucial factor in the country’s inflation dynamics, policymakers will remain vigilant in their efforts to mitigate food-related inflation shocks and create a conducive environment for economic growth and stability.
The decline in retail inflation in August offers hope for a more stable economic environment and provides an opportunity for policymakers to address the underlying challenges that contribute to India’s inflationary pressures.
Sources By Agencies
About The Author
