Retail inflation, which is based on the Consumer Price Index, rose to 3.21% in August, government data showed on Thursday. This is the highest retail inflation figure in 10 months.
Retail inflation in rural areas declined slightly from 2.19% in July to 2.18% in August. In urban areas, it rose from 4.22% to 4.49%. Consumer food price inflation stood at 2.99% in August compared to 2.36% in July.
A retail inflation figure of 3.21% indicates that prices were that much higher this August as compared to August 2018.
The Reserve Bank of India targets a retail inflation of 4% with a tolerance band of 2% on either side. It uses monetary policy to control inflation. In its last bimonthly monetary policy meeting in August, the central bank reduced the repo rate for the fourth time this year to 5.4%.
The repo rate is the interest rate at which the RBI lends to commercial banks. So when the interest rate is lowered, it encourages more money supply in the economy, and can help increase inflation rates when they have been on the decline.
Industrial production grew 4.3% in July, according to data released on Thursday. It had declined to a four-month low of 2% in June.
In July, the mining sector grew 4.9% as against 3.4% in the corresponding month last year. The manufacturing sector grew 4.2% compared to 7% last year, and the electricity sector’s growth too slipped to 4.8% from 6.6% a year ago.
Now, follow and debate the day’s most significant stories on Scroll Exchange.