India’s retail inflation cooled to a four-month low of 5.3 percent in August from 5.59 percent in the previous month, led by subdued prices of food articles and a high base effect. Inflation based on the Consumer Price Index (CPI) remained within the RBI’s tolerance band for the second consecutive month, according to the data released by the Ministry of Statistics and Programme Implementation, on Monday.

While the Consumer Price Index (CPI)-based retail inflation declined to 5.3 percent in August from 6.69 percent in the same month a year ago, food inflation dipped at a much faster pace to 3.11 percent from 9.05 percent in August 2020. The food inflation was also lower than 3.96 percent in the preceding month of July.   Retail inflation, which rose sharply to 6.3 percent in May from 4.23 percent in April, has been on a downward trajectory since then. It was 6.26 percent in June and 5.59 percent in July this year.

The Reserve Bank of India, which mainly takes into account retail inflation to decide the monetary policy every two months, has been tasked by the government to keep it at 4 percent, with a tolerance band of 2 percent on either side. As per the data released by the National Statistical Office on Monday, inflation in ‘vegetables’ and ‘cereals and products’ contracted by 11.68 percent and 1.42 percent, respectively.

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