Retail inflation in India edged up to 3.65% in August, a slight increase from 3.6% in July, but remained within the Reserve Bank of India’s (RBI) target of 4%, according to government data released on Thursday. This marks a significant drop from the 6.83% recorded in August 2023.
Inflation in the food basket also rose marginally to 5.66% in August from 5.42% in July, as per the National Statistical Office (NSO) data. The government has tasked the RBI with maintaining retail inflation at 4%, with a margin of 2% on either side. Despite the rise, inflation remains well under control compared to last year’s levels.
“Despite this easing of inflationary pressures, lower-than-expected GDP growth for the quarter ending June 2024 and the likelihood of a rate cut by the US Fed, we expect the RBI to maintain its current policy rate for now. However, the central bank’s stance and forward guidance are likely to turn more dovish, signaling potential future easing,” Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers.
“ICRA estimates the headline CPI inflation to rise to ~4.8% in September 2024 from 3.7% in August 2024, led by a sharp uptick in the food and beverages inflation print amid the fading of the elevated base. Notwithstanding the anticipated hardening in September 2024, the average CPI inflation will undershoot the MPC’s Q2 FY2025 estimate of 4.6%,” said Aditi Nayar, Chief Economist and head of Research and Outreach at ICRA.