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RBI teeters on the edge of failure as retail inflation scales back 7% level

The latest number means headline retail inflation has now spent 35 consecutive months above the medium-term target of 4 percent and eight straight months outside the 2-6 percent tolerance range of the Reserve Bank of India

September 13, 2022 / 06:44 AM IST
Representative image

Representative image

India's headline retail inflation rate, as measured by the Consumer Price Index (CPI), returned to 7 percent territory in August from a five-month low of 6.71 percent in July, according to data released on September 12 by the Ministry of Statistics and Programme Implementation.

CPI inflation had fallen to 6.71 percent in July after spending three consecutive months above 7 percent.

At 7 percent, the August CPI inflation figure is slightly above the consensus estimate. As per a Moneycontrol poll, CPI inflation was seen rising to 6.9 percent.

CPI inflation has now spent 35 consecutive months above the Reserve Bank of India's (RBI) medium-term target of 4 percent and eight straight months outside the central bank's 2-6 percent tolerance range.

Inflation in August was pushed higher by an increase in prices of certain food items. These included cereals, vegetables, and pulses.

AUG 2022 INFLATIONCHANGE IN INDEX, AUG 2022 VS JUL 2022
CPI7%0.5%
Food index7.62%0.7%
  Cereals9.57%2.4%
  Meat, fish0.98%-3.1%
  Oils, fats4.62%-1.7%
  Vegetables13.23%2.5%
  Pulses2.52%1.7%
Clothing, footwear9.91%0.7%
Housing4.06%0.7%
Fuel, light10.78%-0.4%
Miscellaneous5.95%0.4%

While the index for cereals rose by 2.4 percent month-on-month in August, that of vegetables was up by an even larger 2.5 percent when compared to July.