On the strength of lower food costs, consumer price index-based inflation (CPI) for July came in at 5.59 percent, returning to the Monetary Policy Committee's target range of 4 (+/-2) percent.
Consumer Food Price Inflation (CFPI) fell to 3.96 percent in July from 5.15 percent in June, according to statistics released by the National Statistical Office on August 12.
The CPI inflation rate was above the MPC's target band in May and June. Food prices had stiffened, and transportation expenses had risen due to increasing gasoline and fuel prices and localised lockdowns, so it was 6.30 percent in May. In June, headline retail inflation was 6.26 percent, down from 6.27 percent in May.
The Consumer Food Price Index (CFPI), which measures inflation in the food basket, fell to 3.96 percent in July from 5.15 percent in June, according to the data.
The CPI data has now fallen below the Reserve Bank of India's (RBI) upper margin of 6% for the first time in three months. Prior to this, the CPI had been above 6% for two months in a row. For a five-year term ending March 2026, the government has asked the central bank to keep retail inflation at 4% with a 2% buffer on either side.
It should be emphasized that if businesses opt to pass on additional expenses to customers, retail inflation will skyrocket.
If inflation grows in the future, it may have a negative impact on the economy. To promote economic recovery, the RBI has kept key interest rates low and maintained an accommodative attitude for a long time.