Driven by food and other items, India’s retail inflation further eased to 6.71% in July 2022 from 7.01% in the previous month but stayed above the upper tolerance band of the Reserve Bank of India (RBI). As per data released by the Ministry of Statistics and Programme Implementation (MoSPI), food inflation during July stood at 6.75% as compared to 7.75% in June. Besides relief for the common man, softening inflation is set to ease pressure on government and policy-makers who have been grappling with high inflation numbers for the past several months.
The RBI has increased the benchmark lending rate by 140 basis points (100 basis points equal to one percentage point) since May this year to contain rising inflation. With global crude prices showing a downward trend, inflation is expected to further soften going forward.“Given the base effects, we caution that the next two CPI inflation prints could rise slightly from the 6.7% seen in July 2022, in spite of which we believe that the average inflation for the ongoing quarter will modestly trail the MPC’s projection of 7.1%,” said ICRA Chief Economist Aditi Nayar.
