According to information issued by the Ministry of Statistics and Program Implementation, India's headline retail inflation rate, as measured by the Consumer Price Index (CPI), decreased to 6.71% in July from 7.01% in June.
Price reductions on edible oil and falling commodity prices globally are both responsible for decreasing inflation. The CPI inflation rate has decreased, although it is still more than the RBI's upper tolerance zone.
The overall goods inflation came in at 6.75 percent as compared to 7.75 percent in the previous month, while, inflation in vegetables was at 10.9 percent in July. Fuel and light inflation came in at 11.76 percent. Disruption in supply chain due to Russia-Ukraine war is pressurising domestic inflation. Last week, the central bank has hike repo rate by 50 basis points to tame inflation, but kept the inflation forecast unchanged. "With inflation expected to remain above the upper threshold in Q2 and Q3, the MPC stressed that sustained high inflation could destabilise inflation expectations and harm growth in the medium term.
The MPC, therefore, judged that further calibrated withdrawal of monetary accommodation is warranted to keep inflation expectations anchored and contain the second-round effects," RBI Governor Shaktikanta Das said during the monetary policy review. The RBI projected inflation is at 6.7 percent in 2022-23, with Q2 at 7.1 percent, Q3 at 6.4 percent, and Q4 at 5.8 percent, with risks evenly balanced. CPI inflation for Q1:2023-24 is projected at 5 percent.