India CPI Retail Inflation Rate August 2020

Marco Green
September 16, 2020

The 13.22 per cent inflation rate is the highest since April 2018, the NBS data showed.

"The urban inflation rate increased by 13.83 percent (year-on-year) in August 2020 from 13.40 percent recorded in July 2020, while the rural inflation rate increased by 12.65 percent in August 2020 from 12.28 percent in July 2020".

Last month, the Reserve Bank of India had refrained from easing the monetary policy further, after months of aggressive cuts in interest rates, citing inflationary pressures. Core inflation, too, has been inching up, approaching 6 percent now, from 4 percent earlier this year. Why is the inflation still high despite demand is still sluggish and growth is dismal? This hardening of consumer inflation above 6 per cent makes a further rate cut hard in RBI's monetary policy committee meeting in the first week of October, suggesting that the rate-cut cycle to propel growth may be paused. "The inflation figure for the fifth month in a row remains above RBI's medium-term target of 6 per cent, so RBI rate cut hopes still remains low at least at the October policy". "With favourable monsoon and prospect of good kharif and rabi crops, India Ratings expects that food inflation will ease from here on", Sunil Kumar Sinha, principal economist at the agency said in a note.

" On a month-on-month basis, the Headline index increased by 1.34 percent in August 2020". Apart from meat and fish segment, the pulses and products segment saw a rise of 14.44 per cent, while that of oils and fats rose 12.45 per cent and spices prices gained 12.34 per cent. The vegetables segment also witnessed a rise of 11.41 per cent.

"The composite food index rose by 16.00 percent in August 2020 compared to 15.48 percent in July 2020".

Other reports by Click Lancashire

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