Due to a rise in grain prices and a little lower base than the one for July, India’s retail inflation, as measured by the Consumer Price Index (CPI), crept up to 3.65% in August from 3.6% in July. Retail inflation decreased to 6.83% in August 2023 from 7.44% in July 2023. Due to a large base impact that lowered the y-o-y inflation print, CPI inflation fell to a 59-month low of 3.6% in July 2024.
Although it was a little less intense, the August print also had a similar effect. August saw no change in the total index sequentially, indicating no change in prices over the month.
Given the decline in the cost of essential food items, such as vegetables, which saw a 2.5% monthly price drop, economists had predicted that August inflation would be marginally lower than the July headline. However, the decline was compensated by successive upward pressure on other items.
Core inflation was 3.4% in August and is only predicted to increase from here on out. Economists predict that in the upcoming months, retail prices will likely be more impacted by the rising costs of industrial inputs. According to most, core inflation could reach 4% during the following three months.
According to Reserve Bank of India projections, Q2FY25 CPI inflation will average 4.4%. Based on the most recent data, inflation would need to soar to 5.9% in September to align with the RBI’s projection, which analysts deem improbable. Most predict that the September print will be almost 5%.
The average price of Indian crude oil so far in September is $73.67 per barrel, which is the lowest price in 33 months. Despite the tension in the Middle East, this is primarily the result of the global economy slowing down as predicted.
