NEW DELHI: Retail inflation based on consumer price index (CPI) fell marginally to 6.69 per cent in the month of August as against 6.73 per cent in July, government data released on Monday showed. This may be due to high food and fuel prices as a result of supply disruptions due to the ongoing Covid pandemic.
The retail inflation figure for the month of July was revised downwards by the government to 6.73 per cent from 6.93 per cent earlier.
Food inflation in August fell marginally to 9.05 per cent, according to the data.
Even though the government has eased lockdown restrictions to a large extent to revive the economy, supply disruptions remain as coronavirus cases continue to rise in the country at the fastest pace. Hence, food prices — which account for nearly half the inflation basket — continue to soar.
The Reserve Bank of India (RBI), which mainly factors in retail inflation while arriving at its monetary policy, had last month kept the key short-term lending rate unchanged to help tame inflation. The central bank has reduced repo rate by a total of 115 basis points since the pandemic began but kept it on hold on concerns over rising price pressures.
The Monetary Policy Committee (MPC) headed by the RBI governor Sahkitikanta Das has been given the mandate to maintain annual retail inflation at 4 per cent until March 31, 2021, with an upper tolerance of 6 per cent and a lower tolerance of 2 per cent. The inflation figures for August exceeds the RBI’s comfort level.
A recent report by the State Bank of India (SBI) attributed the surge in retail inflation to huge government procurement and supply disruptions on account of the pandemic. It further suggested that the price rise was likely to come down to below 4 per cent only after December.
In another set of data released this morning, the wholesale price based inflation rose 0.16 per cent in August as food and manufacturing products turned costlier. The WPI inflation was in the negative territory for four straight months — April (-) 1.57 per cent, May (-) 3.37 per cent, June (-) 1.81 per cent and July (-) 0.58 per cent.