As food prices decreased in July, India’s retail inflation rate fell to 3.54%, nearly five years below its previous peak, according to government statistics released on Monday. This reduction comes after an inflation rate of 5.08% in June, which was the lowest since August 2019.
The Reserve Bank of India’s 4% goal inflation rate was not met by the actual rate, which was mainly because of a high base effect from the previous year. Economists had projected a slightly higher rate of 3.65%. According to Reuters, the comparative decline this year was primarily caused by inflation, which peaked in July 2022 at 7.44%.
Food costs, which make up almost half of the retail inflation basket, decreased significantly in July, increasing by just 5.42% annually as opposed to a 9.36% increase in June. Notably, prices for vegetables increased by 6.83% in July—a significant decrease from the 29.32% increase in June.
Although there is some short-term respite from inflation, analysts warn that the reduced rate of price increases might not last.
The Ministry of Statistics and Program Implementation (MoSPI) has released the Index of Industrial Production (IIP), which indicates a growth rate of 4.2% for June 2024. According to Ministry data, this represents a minor rise of 0.2% above the 4% growth rate noted in June 2023.
June’s manufacturing production increased by 2.6% over the same month last year, up 3.5%. According to Reuters, mining activity increased 10.3% compared to a 7.6% growth in the previous year, while electricity generation increased 8.6%, as opposed to a 4.2% increase last year.
