India’s retail inflation eased to 6.83 per cent in August from 7.44 per cent in July as vegetable prices cooled somewhat compared to the previous month, the National Statistical Office (NSO) data showed on Tuesday.

At 6.83 per cent, the Consumer Price Index (CPI) inflation print for August is 61 basis points lower than July’s 15-month high of 7.44 per cent. Despite slowing down, it continued to stay outside the tolerance band of the Reserve Bank of India (RBI). 

This is the fourth instance when the retail inflation rate or the CPI has breached the RBI’s upper limit of 2-6 per cent in 2023 and the seventh instance since July 2022. The RBI mainly factors in retail inflation while deciding the benchmark interest rate (repo rate). The central bank has projected the CPI inflation at 5.4 per cent for 2023-24.

On the other hand, India’s industrial output grew by 5.7 per cent in July from 3.8 per cent in June. The July IIP growth of 5.7 per cent is above expectations of 5.0 per cent.

India’s urban CPI slowed to 6.59 per cent from 7.20 per cent in July, while rural inflation fell to 7.02 per cent from 7.63 per cent a month ago. Food inflation, which accounts for nearly half of the overall consumer price basket, rose to 9.94 per cent compared with 2.91 per cent in the previous month.

Vegetable prices, still high, rose 26.1 per cent against a staggering 37.34 per cent rise in July, while prices of oils and fats declined by 15.3 per cent after dropping by 16.8 per cent in the previous month.

Cereal prices remained in double digits and rose 11.6 per cent in August as compared with 13 per cent in July. Milk and milk products inflation came in at 7.7 per cent as compared to a rise of 8.34% in the previous month.