Retail inflation cools to 4.17% in July; pulses, vegetable prices eases

Marco Green
August 15, 2018

Determined by Consumer Price Index (CPI), consumer or retail inflation in June was revised to 4.92 per cent, from a provisional 5 per cent previously.

Its previous low was in October 2017 at 3.58 per cent.

As for year-on-year comparison, retail inflation had increased by 2.36 percent in July last year.

The rise in global fuel prices has led to a continuous increase in inflation in the fuel and light segment, Mr. Pant added. The June round of the RBI's survey of households reported a further uptick of 20bps in inflation expectations, for both three-month and one-year ahead horizons, compared with the last round.

Economic Affairs Secretary S C Garg said that all macroeconomic parameters are performing well.

Aditi Nayar, Principal Economist at ICRA, said surprises from fruits, vegetables, clothing and footwear, and pan, tobacco and intoxicants contributed to a substantial correction in the headline CPI inflation.

The RBI has raised its inflation outlook to 4.8% in the second half (October-March) of 2018-19 from its earlier projection of 4.7%. "Despite the truckers' strike, food inflation eased considerably in July 2018, benefiting from the base effect", she said.

He said that this category, coupled with the transport and communication group, is expected to exert pressure on retail inflation.

As per the data, the inflation in protein-rich items like meat and fish, and also milk was also slower in July compared to the previous month.

According to Prasanna, with FY19 headline CPI inflation to average 4.7-4.8 per cent and core inflation averaging 5.8 per cent, chances of impending rate hikes, though, have come down, but the hike cycle is not over yet.

"Crude oil prices continue to display a volatile trend, driven by geopolitical risks and concerns regarding supply as well as demand in various parts of the world". Price data are received through web portals, maintained by the National Informatics Centre.

Other reports by Click Lancashire

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