The is the first time in nearly five years that retail inflation has climbed down below the targeted 4 percent, the last time this happened was back in September 2019.
In a major relief for citizens, the retail inflation has declined to 3.54 percent in July, according to government data published on Monday. This is the first time in nearly five years that the retail inflation has dipped below the Reserve Bank’s targeted 4 percent as food prices cooled, the data revealed.
As per the data released by the National Statistical Office (NSO), the inflation in the food basket was 5.42 per cent in July, down from 9.36 per cent in June. Similarly, the Consumer Price Index (CPI) based retail inflation was 5.08 per cent in June 2024 compared to 7.44 per cent in July 2023.
The is the first time in nearly five years that retail inflation has climbed down below the targeted 4 percent, the last time this happened was back in September 2019.
The government has tasked the Reserve Bank of India (RBI) to ensure that the CPI inflation remains at 4 percent with a margin of 2 per cent on either side.
RBI retains growth, inflation projection
Last week, the RBI retained the growth and inflation projection at 7.2 percent and 4.5 percent respectively for the current fiscal amid expectations of a normal monsoon.
In its last bi-monthly monetary policy review in June, RBI had projected real GDP growth and retail inflation at the same.
RBI Governor Shaktikanta Das while announcing bi-monthly monetary policy said that improved agricultural activity brightens the prospects of rural consumption, while sustained buoyancy in services activity would support urban consumption.
“The healthy balance sheets of banks and corporates; thrust on capex by the government; and visible signs of pick up in private investment would drive fixed investment activity. Improving prospects of global trade are expected to aid external demand,” he said.
The spillovers from protracted geopolitical tensions, volatility in international financial markets and geoeconomic fragmentation, however, pose risks on the downside, he said.
Taking all these factors into consideration, he said, real GDP growth for 2024-25 is projected at 7.2 per cent, with Q1 at 7.1 per cent; Q2 at 7.2 per cent; Q3 at 7.3 per cent; and Q4 at 7.2 per cent.
Real GDP growth for Q1 FY26 is projected at 7.2 per cent, he said, adding, the risks are evenly balanced.