New Delhi: Retail inflation in the country eased to 6.71 per cent in July. It is the lowest rate of inflation since March. However, the inflation figure was still above the upper limit of the Reserve Bank of India’s (RBI) target range for seven straight months. The RBI’s upper limit of inflation stands at 6 per cent. In June, inflation stood above 7 per cent for the third month in a row, at 7.01 per cent from a year ago.
In June, easing of food prices – which account for nearly half of the consumer price index basket – and fuel costs helped lower the pace of increase in price pressures. According to the data made available by the government food inflation in July 2022 moderated to 6.75 per cent, compared to 7.75 per cent in June.
The bulk of the slowdown comes from recession fears, which have lowered global commodity prices, with the international oil benchmark, Brent crude, is down about 9 per cent for the month, hitting pre-Ukraine crisis lows, and below $100 a barrel.
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That slowdown is also because of the lagged reflection of the fuel tax cut. Government interventions to reduce import duties and restrictions on wheat exports helped too.
Still, consumer price rises are expected to persist at a strong pace in the months ahead, with the RBI’s projections pointing to inflation remaining above its upper end of the 2-6 per cent target range.
The near-term inflation outlook is still quite uncertain because the government’s efforts to rein in consumer price increases may be less effective due to the unevenness of this year’s rainfall and a weak.