CRISIL Economy First Cut: Inflation eases a touch, IIP ticking along well

Inflation, as measured by the Consumer Price Index (CPI), declined to 6.7% on-year in July from 7.0% previous month. Food drove the moderation in inflation, while non-food inflation rose. Headline inflation remains above 6%, the upper limit of the RBI's target range, for the seventh month in a row.

"CPI inflation is gradually easing, helped by the dissipating impact of heatwave, softening global prices, and government interventions on certain items. Progress of monsoon and its impact on food production will shape the inflation trajectory in the second half. Pressure will remain from producers, increasing the pass through of costs to consumer prices. With the revival in contact-based services, the pressure on services inflation will continue. Due to these factors, we expect CPI inflation to average 6.8% this fiscal, up from 5.5% in the previous year," CRISIL has said in a report.