Retail inflation in India eases to 6.71% in July

Tags: Economy/Finance

India's retail inflation eased to 6.71% in July on moderation in food inflation, according to data from the National Statistical Office, but remained well above the 4-6% limit set by the Reserve Bank of India for the seventh consecutive month.

Important facts

• Food inflation in July 2022 moderated to 6.75% as against 7.75% in June, according to the data.

• Retail inflation remained above 7% in the first three months of the current fiscal.

• Retail inflation remained elevated despite a fall in vegetable and edible oil and other commodity prices.

• In such a situation, the RBI may make another hike in the policy rate in the proposed monetary policy review at the end of September.

• According to the data, the main reason for the moderation in retail inflation in July is the reduction in vegetable and edible oil prices. In terms of fuel and power, prices remain high.

• As per the data, inflation in vegetable and oil and fat segments moderated in July to 10.90 per cent and 7.52 per cent, respectively.

• In the month of June, it was 17.37 percent and 9.36 percent respectively.

• Fuel inflation stood at 11.76 per cent in July as against 10.39 per cent earlier.

• India's factory output, as measured by the Index of Industrial Production (IIP), fell to 12.3 per cent in the month of June, compared to 19.6% in May.

• Manufacturing sector output grew 12.5% in June 2022.

• Mining production grew by 7.5% and electricity generation by 16.4% in June this year.

• The index rose 12.7% in April-June 2022, compared to a rise of 44.4% in the same period a year ago.

What is CPI based inflation or retail inflation?

• CPI (Consumer Price Index) monitors retail prices at a certain level for price movement of a particular commodity, goods and services at rural, urban and all India levels.

• The change in the price index over a period of time is known as CPI-based inflation, or retail inflation.

• CPI formula - (Price of basket in current period / Price of basket in base period) x 100