July retail inflation softens to 6.71% from 7.01% in June

India's retail inflation softened to 6.71 per cent in July from 7.01 per cent in June according to a data release by the government on Friday. The rural inflation remained high for the second consecutive month at 6.80 per cent versus urban inflation 6.49 per cent in July. In June, the Consumer Price Index (CPI) stood at 7.09 in rural centres while remaining at 6.86 per cent in the urban pockets, the release by Ministry of Statistics & Programme Implementation said.

The Price data were collected from selected 1114 urban Markets and 1181 villages covering all States/UTs, the government release said. During the month of July 2022, NSO collected prices from 99.7 per cent villages and 97.6 per cent urban Markets while the Market-wise prices reported therein were 89.5 per cent for rural and 92.3 per cent for urban.

The Consumer Food Price Index (CFPI) for July stood at 6.75 per cent. The rural CFPI stood at 6.80 while the urban CFPI stood at 6.69 per cent, the release further said.

Mohit Ralhan, Global CEO and Managing Partner at TIW Capital Group

“The inflation appears to be easing with CPI coming at 6.71% in July in comparison to 7.01% in June. It looks like the peak of inflation was 7.79% in April and the trend is downwards. Still, as far as inflation is concerned India is not out of woods as it remains above 6% now for 7 months. RBI will be hard pressed to bring the inflation down to below 6% as it will need to submit a report to the government if inflation remains above 6% for one quarter more. The dependency on global factors including energy prices and geopolitical environment is high and RBI is likely to continue increasing interest rates further over the next few months. The IIP growth of 12.3% in June is lower than 19.6% in May, it is quite ahead of the estimated 10%-11% number. Irrespective of the lower base effect, it indicates that factory output is moving in the right direction and give more headroom to RBI for policy maneuvering.”