India’s retail inflation(consumer price index) stood at 3.65% as compared to 6.83% a year ago, as per the official data released by the National Statistical Office(NSO), Ministry of Statistics and Programme Implementation(MoSPI). As per MoSPI, “The year-on-year inflation rate(3.65%) based on All India Consumer Price Index(CPI) for August 2024 is the second lowest in the last 5 years.” The corresponding inflation rates for rural and urban areas are 6.02% and 4.99% respectively. CPI inflation in July had eased to a 59-month low of 3.54% from 7.44% in July 2023 and 5.08% in June 2024. The provisional number for the consumer food price index(CFPI) number for August 2024 is 5.66%. Food inflation which accounts for 50% of the overall CPI basket, stood at 5.66% in August as compared to a 13-month low of 5.42% in the previous month. The easing of the overall CPI is primarily due to the impact of the higher base in July 2023. At an item level, “Tomato” reflected the lowest year-on-year inflation. Declines were also witnessed in sub-groups of “Spices”, “Meat and Fish”, and “Pulses and Products” as highlighted by the MoSPI. There are concerns about a sharp pickup in the CPI inflation to 4.8% in September owing to base effect normalisation. As per experts, the broader numbers might range between 4.4% and 4.7% in H2 FY2025.
Quoting a State Bank of India(SBI) research report, the news agency ANI reported, “India has shown itself to be a largely successful inflation-targeting regime compared to advanced economies like the USA and Germany”. The SBI report applauds and highlights a tight act of balancing between the government’s fiscal initiatives and RBI’s monetary measures has resulted in the fruition of a healthy financial ecosystem. The SBI report also highlighted that “India witnessed minimal deviations in its inflation targets between 2021 and 2024. This demonstrates the effectiveness of the inflation control measures.” The SBI report has strongly backed up India’s monetary policy framework during this critical juncture.
