Retail inflation cools in August at 6.83%, but stays above target
On September 12th, 2023 at 6:18 PM in Indian Standard Time.
August Saw Lower Consumer Inflation At 7.44% Compared To July’s Peak
New Delhi recently released official data which disclosed that retail inflation decreased to 6.83% as compared to a year ago in August, but it still remains above the target of Reserve Bank of India's 4% (+/-2).
Consumer price increase took a slower path in August, compared to July's peak of 7.44% over the last 15 months. This can be attributed to the lower costs of edible oil and a slightly reduced vegetable inflation.
The information demonstrated that in August, the overall cost of food decreased to 9.94% from the previous year. This is a smaller increase than the 11.51% rise that happened in the previous month.
For the second consecutive month, consumer price inflation has surpassed the central bank's desired range, primarily due to a significant increase in the costs of tomatoes and vegetables.
The cost of breakfast cereal stayed high, increasing by 11.6% in August. This is a slightly slower growth compared to July's increase of 13%. The price of milk and its related products also went up, but at a slightly lower rate of 7.7%, compared to the previous month's hike of 8.34%.
The cost of vegetables continues to remain high, but it only increased by 26.1% this month. This is a significant drop compared to the shocking 37.34% increase we saw in July. On the other hand, the price of oils and fats decreased by 15.3% this month, which is slightly less than the 16.8% drop we saw in the previous month.
To combat the issue of expensive food prices, the government has implemented trade regulations on many food products to reduce the inflation rate for consumers. India has disallowed the exportation of rice and wheat, imposed a 40% tax on onion exports, and has authorized the import of pulses without any duty. Experts predict that inflation will decrease come September with the arrival of new crops on the market.
Zia Haq covers topics related to public policy, the economy, and agriculture. Specifically, he finds development economics and growth theories to be of great interest.
