Retail Inflation Falls Below 4% For the First Time in 2018

The consumer price inflation (CPI) has fallen below 4 percent for the first time in 2018. Data released by the Central Statistics Office (CSO) on Wednesday, showed how retail inflation dropped to 3.69 percent for the month of August compared to 4.17 percent in July indicating that the prices for vegetables and pulses remained within reach despite fuel price hikes.

Inflation is therefore currently running below the Monetary Policy Committee's forecast of 4.6 percent for the second quarter of the current financial year. It has a mandate of maintaining inflation in a band of 4 (+/-2) percent. The lower than expected inflation would be a topic of major consideration in MPC's upcoming meet.

Compared to the last year, prices of vegetables and pulses fell sharply, but the inflation was balanced by the rise in the fuel and light category. CPI food inflation was at 0.29 percent in August compared to 1.37 percent in July.

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