India's retail inflation declines to near 5-year-low of 3.5% in July

In July last year (2023), consumer inflation had touched 7.4 percent.

Sequentially, however, there was 1.4 percent rise in prices in the consumer basket, with food prices rising 2.8 percent, while pulses inflation continued to remain in double digits, with cereal prices also rising 8.14 percent in July from the previous year, reports Moneycontrol.

Meanwhile, core inflation increased to 3.4 percent in July this year compared with 3.1 percent.

Economists contend that inflation is likely to surprise on the downside compared with the Reserve Bank of India (RBI)’s 4.4 percent inflation forecast for July-September 2024, according to Moneycontrol.

While the RBI did not change the overall inflation outlook for FY25 from 4.5 percent, it did project a higher inflation of 4.4 percent from 3.8 percent for the second quarter of FY25, as per reports.

RBI governor Shaktikanta Das last week expressed concerns over elevated household inflation expectations, highlighting that fall in core inflation does not merit a change in monetary stance.

The central bank in its policy meeting concluded on August 8, kept the policy rate on hold for the ninth consecutive time, according to reports.