CPI Inflation Falls To Five-Month Low Of 6.71% In July
The Consumer Price Index inflation eased to 6.71% in July from 7.01% in June.
Retail inflation eased for the third straight month, led by a decline in prices of food items.
The Consumer Price Index inflation fell to 6.71% in July from 7.01% in June, according to data released by the Ministry of Statistics and Programme Implementation on Friday.
Inflation in food and beverages eased to 6.71% from 7.56% in June 2022. Core inflation fell to 6.04% in July, compared to 6.22% in June.
A Bloomberg poll of 38 economists had estimated inflation at 6.75%.
Despite the decline, July marks the seventh straight month of retail inflation exceeding the Reserve Bank of India's upper target. A surge in inflation has prompted the Monetary Policy Committee to raise the policy repo rate to 5.4%—its third hike in a row.
Driven by food and miscellaneous items, the CPI inflation dipped to 6.7%, offering relief after the successive prints above 7% in Q1 FY23, Aditi Nayar, chief economist at ICRA, said.
Given the base effects, the next two CPI inflation prints could rise slightly from 6.7%, in spite of which the average inflation for the ongoing quarter will modestly trail the MPC's projection of 7.1%, Nayar estimates.
Upasna Bhardwaj, chief economist at Kotak Mahindra Bank, said that headline inflation for July has moderated led largely by food inflation, while core inflation remains elevated and sticky. The coming few readings are expected to be a tad above 7%, with inflation likely to hover above the RBI's upper threshold limit of 6% until January 2023, she said. As such, the RBI is expected to hike the repo rate to 6% by the end of 2022 followed by a pause and a shift to neutral policy stance, according to her expectations.
Inflation Internals
Cereal prices rose 6.9% over a year ago compared with an increase of 5.66% in the previous month. Month-on-month, inflation rose by 1%.
Inflation in meat and fish was at 3% compared with 8.61% in June. It fell by 2.9% month-on-month.
Inflation in oils and fats was at 7.52% compared with 9.36%. It fell by 2.5% month-on-month.
Vegetable prices rose 10.9% over a year ago compared with an increase of 17.37% in the previous month. Prices fell marginally by 0.1% from the previous month.
Pulses inflation was at 0.18% compared to -1.02% last month. Prices were flat month-on-month.
Clothing and footwear inflation was at 9.91% compared to 9.52% a month ago. Prices rose 0.8% month-on-month.
Housing inflation stood at 3.9% compared with 3.93% the preceding month. Prices rose 0.6% month-on-month.
Fuel and light inflation stood at 11.76% against 10.39% in June. Prices rose 2% month-on-month.