Retail Inflation Likely Eased Further in August
Retail inflation in India likely eased further in August, with most analysts expecting the Consumer Price Index (CPI)-based inflation to have fallen between 3.2% and 4%. This follows a 59-month low of 3.54% in July, down from 7.44% in July 2023 and 5.08% in June 2024.
The decline in inflation is attributed to several factors, including a high base effect from July 2023 and a further reduction in vegetable prices. The government will release the official CPI inflation data for August on September 12.
Analysts believe that vegetable prices, especially tomatoes, have eased further in August, providing some relief to consumers. This is supported by high-frequency data and the Crisil Roti Rice Report, which indicates a decline in both veg and non-veg thali costs.
However, the report also highlights an increase in onion and potato prices due to lower rabi arrivals. This has capped the decline in thali costs.
Overall, the outlook for inflation remains positive, with a normal monsoon expected to further ease price pressures. However, unseasonal and excess rainfall in parts of the country remains a key risk. The Reserve Bank of India (RBI) is expected to maintain its current stance on interest rates, with a possible rate cut only in December 2024.