India’s retail inflation for August eased to 5.30% from 5.59% in July, government data showed on Monday. This was the third consecutive month that retail inflation has shown a decline.
The data, which is an indicator of price rise, remained within the Reserve Bank of India’s targeted range of 2% to 6%.
The inflation in food prices dropped to 3.11% from 3.96% in July, according to data released by the National Statistical Office. Food prices make up nearly half of the inflation basket.
According to the government data, inflation prices of vegetables contracted by 11.7%, while those of cereals came down by 1.42%. However, inflation in oils and fats rose by 33%. The prices of eggs, fish and meat also went up in August.
Radhika Rao, economist and Senior Vice President of DBS Bnak Singapore, said that inflation decelerated on the back of favourable base effects and moderate food price, PTI reported. “The inflation tailwind will allow the central bank to remain accommodative at the October [monetary] policy review,” she added.
The RBI had kept the key interest rates unchanged in its monetary policy review in August. However, the central bank had raised its inflation projection for the fiscal year 2021-’22 to 5.7% compared to 5.1% in the last announcement.
Vivek Kumar, an economist at financial services firm QuantEco Research, said that the inflation numbers in the last two months vindicate the RBI’s accommodative policy stance, Mint reported.
An accommodative stance suggests that a central bank will cut rates to inject money into the financial system whenever needed.