India’s retail inflation cooled marginally to 6.69% in August but stayed well above the 6% outer band of the central bank’s inflation target, likely ruling out the possibility of a near-term rate cut.
The rate of inflation – as measured by the Consumer Price Index (CPI) — was 6.73% in July.
The Reserve Bank of India’s monetary policy committee (MPC) had left the repo rate – the rate at which it lends to banks — unchanged at 4% in its last review meeting in August.
The central bank has a 4% consumer inflation rate target, with a two-percentage point band on either side. CPI inflation has been above the 6% mark since April.
The government revised downward the headline CPI number for July from 6.93% earlier.
Food inflation, led by vegetables, pulses, oils, and meat & fish, was 9.05% last month, lower than 9.27% in July.
Urban inflation at 6.8% was above the national average but also higher than 6.66% registered in rural areas in the past month.
Separately, released data by the commerce and industry ministry showed that India’s wholesale inflation turned positive in August for the first time since March, reflecting a recovery in producers’ pricing power.
Wholesale Price Index (WPI) inflation rose to 0.16% in August from a 0.58% contraction in July, as inflation for manufactured items advanced to 1.27% from 0.51% from the trailing month.
WPI was 1.17% in August 2019.
“It may be seen that as various pandemic-related restrictions were gradually lifted and nonessential activities started resuming operations, availability of price data has also improved,” the National Statistical Office (NSO) said in a statement on Monday.
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