India’s Retail Inflation Continues to Fall

• Retail inflation in India remained under the Reserve Bank of India’s median target of 4% for the second consecutive month in August.
• The inflation pace is the second-slowest in five years.
• The base effect from last year’s 6.8% increase in retail prices helped control inflation growth.
• Food inflation increased from July’s 13-month low of 5.4% to 5.7%, crossing the 6% mark in rural India.
• Tomatoes reported the sharpest drop in prices, declining 47.9% year-on-year and 28.8% month-on-month.
• Vegetable inflation shot back into double-digits to hit 10.7% after slipping to 6.8% in July.
• The Consumer Price Index (CPI) was up 5% last September, suggesting a resurge in price rise.
• ICRA chief economist Aditi Nayar anticipates a sharp pickup in consumer price inflation to around 4.8% in September, and range between 4.4% and 4.7% in the second half of 2024-25.
• A change in the monetary policy stance could not be entirely ruled out in October.