July retail inflation eases to 6.71% on food prices, stays above RBI target

India’s headline retail inflation for July was its lowest in five months, helped by an easing of global commodity prices and lower food prices domestically but above the central bank’s medium-term target.

Data released by the National Statistical Office on Friday showed consumer price index-based inflation for July was 6.71 per cent, compared with 7.01 per cent in June. Consumer food price index (CFPI) was 6.75 percent in July, down sharply from 7.75 per cent in June.

Among the sub-groups, inflation for vegetables was 10.90 per cent compared with 17.37 percent in June. Edible oil inflation rate was 7.52 per cent compared with 9.36 per cent and the rate for meat and fish was 3 per cent compared with 8.61 per cent.

Inflation for fuel and light was 11.76 per cent compared with 10.39 per cent in June. However, with global prices coming down due to fears of a recession in advanced economies, fuel inflation is expected to soften further.

After the monetary policy committee hiked the repo rate earlier this month, RBI Governor Shaktikanta Das struck a hawkish tone and said that with growth momentum expected to be resilient despite headwinds from the external sector.  Monetary policy should persevere further in its stance of withdrawal of accommodation to ensure that inflation moves close to the target of 4.0 per cent over the medium term, he said.