Retail Inflation Touched 10-Month High in August

Retail inflation inched up to a 10-month high of 3.21 per cent in August mainly due to higher prices of food items like meat and fish, vegetables and pulses, government data showed.

However, retail inflation is still within the Reserve Bank’s target range, thus keeping hopes of another rate cut alive.

Inflation based on the Consumer Price Index (CPI) stood at 3.15 per cent in July and 3.69 per cent in August 2018. The previous high was 3.38 per cent in October 2018.

Inflation in the food basket was 2.99 per cent, up from 2.36 per cent in July.

The August data released by the National Statistics Office in the Ministry of Statistics and Programme Implementation also provided details of inflation in segments like ‘health’, ‘recreation and amusement’ and ‘personal care and effects’.

The retail inflation in health was 7.84 per cent, recreation and amusement 5.54 per cent and personal care and effects 6.38 per cent.

Price rise in the ‘education’ segment was recorded at 6.10 per cent in August.

Inflation in meat and fish basket was 8.51 per cent, pulses and products 6.94 per cent and vegetables 6.9 per cent.

The RBI, which mainly factors in CPI for arriving at its bi-monthly monetary policy, has been mandated by the government to ensure that inflation remains at 4 per cent, with deviation of 2 per cent on either side.

The central bank, which has already reduced the key policy rate four times in the current calendar year, is scheduled to announce its next bi-monthly monetary policy on October 4.

The data also revealed that highest rate of inflation was witnessed in Assam at 5.79 per cent, followed by Karnataka (5.47 per cent) and Uttrakhand (5.28 per cent).

Interestingly, inflation was in the negative zone at (-) 0.42 per cent in Chandigarh.

Inflation in rural areas of the country was at 2.18 per cent and 4.49 per cent in the urban areas in August.