Consumer price-based or retail inflation fell to 6.71 per cent in July, compared to 7.01 per cent in June, government data showed on Friday. The figure was above the Reserve Bank of India's upper tolerance range of 6 per cent for the seventh month.
In July 2022, inflation in the food basket fell to 6.75 per cent from 7.75 per cent in the previous month, according to the National Statistical Office NSO data.
CPI headline inflation for July has cooled in line with our expectations, largely due to food inflation, while core inflation remains elevated and sticky. The inflation likely will hover above RBI's upper threshold of 6 per cent until January 2023, with the coming few readings expected to be a tad above 7 per cent. We expect a repo rate of 6 per cent by the end of 2022, followed by a pause and a shift to neutral policy stance, Upasna Bhardwaj, chief economist, Kotak Mahindra Bank, Mumbai, told news agency Reuters.
The RBI has raised interest rates by 140 basis points bps so far this year to 5.40 per cent and may add more in the coming months. RBI Governor Shaktikanta Das said that inflation may not fall within the top end of its mandated target band until December this year.
The Reserve Bank factors in the retail inflation print while arriving at its bi-monthly monetary policy outcome.
The RBI asked it to make sure inflation stays at 4 per cent with a margin of 2 per cent on either side.
In June 2022, industrial production grew by 12.3 per cent from a year ago, according to a set of government data released today.