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Retail inflation eases to three-month low of 5.59% in July

13 Aug 2021 Evaluate

Retail inflation eased to a three-month low of 5.59 per cent in July, mainly due to softening food prices, after holding above 6% for two months in a row. The Consumer Price Index (CPI) based inflation was 6.26 per cent in June and 6.73 per cent in July 2020. The RBI, which has been mandated by the government to keep the retail inflation at 4 per cent with 2 per cent margin on either side, mainly factors in the CPI-based inflation while deciding its bi-monthly monetary policy.

The National Statistical Office (NSO) under Ministry of Statistics and Programme Implementation in its data has showed that the Rural CPI (General) in July 2021 stood at 5.49 per cent as against 6.16 per cent in June. The Urban CPI (General) stood at 5.82 per cent in July as against 6.37 per cent in June. The index value for Rural, Urban and Combined CPI (General) stood at 163.2, 161.8 and 162.5, respectively, in July 2021.

Food prices, which account for nearly half of the inflation basket, rose 3.96 per cent year-on-year in July from 5.15% a month before. Besides, fuel inflation remained elevated in July despite some moderation from the previous month. Petrol was still at 23.70 per cent inflation rate against 24.54 per cent. Diesel saw higher moderation to 22.71 per cent compared to 28.70 per cent. Health services, an important category amid pandemic, saw inflation rate rising moderately to 7.74 per cent from 7.71 per cent.

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