CPI marginally down at 9.86%; still at elevated levels

Business

oi-Sunil

By Sunil Fernandes

Published: Tuesday, August 21, 2012, 11:21 [IST]

The provisional annual inflation rate based on all India general CPI (Combined) for July 2012 on point to point basis (July 2012 over July 2011) is 9.86 % as compared to 9.93 % (final) for the previous month of June 2012.

The corresponding provisional inflation rates for rural and urban areas for July 2012 are 9.76 % and 10.10 % respectively. Inflation rates (final) for rural and urban areas for June 2012 are 9.65 % and 10.44 % respectively. Inflation for specified categories is indicated at Annex II.

CPI figures along with the wholesale price index figures are crucial, when it comes to an RBI decision to cut the repo rates. Today's CPI figure may give the RBI little comfort, when it meets to decide the Monetary Policy action later in September.

Industry has been hankering for rate cuts as economic growth has deterioared in the last few quarters. Higher interest rates are holding back investments in the economy. However, RBI has been reluctant to cut rates given the high inflation in the economy.

The RBI has made it clear that it is not willing to sacrifice inflation for growth and is likely to first fight inflation.

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