Retail inflation eases to three-month low of 5.59% in July

The country's retail inflation eased to a three-month low in July. The Consumer Price Index (CPI)-based inflation eased to 5.59% in July from 6.26% in June mainly due to softening food prices, government data released on Thursday showed.

It had shot up to 6.30 per cent in May.

With the July figure, the country's retail inflation is back within the Reserve Bank of India's (RBI) tolerance level (2-6%) after continuing to stay above the upper band (6%) for two consecutive months.

Also Read: RBI ups FY22 CPI inflation outlook to 5.7%

According to the data released by the National Statistical Office (NSO), food inflation dropped significantly to 3.96% in July from 5.15% in June. 

In its latest monetary policy review earlier this month, the RBI kept the key interest rates and its stance unchanged pledging to stay accommodative in the near future. 

The central bank, however, raised its inflation projection to 5.7% during 2021-22 - 5.9 per cent in the second quarter, 5.3 per cent in the third, and 5.8 per cent in the fourth quarter of the fiscal, with risks, broadly balanced. CPI inflation for Q12022-23 is projected at 5.1 per cent.

Also Read: India's factory output rises 13.6% YoY in June

The RBI, which has been mandated by the government to keep the retail inflation at 4 per cent with a 2 per cent margin on either side mainly factors in the CPI-based inflation while deciding its bi-monthly monetary policy.

Meanwhile, the country's factory output for the month of June (2021) rose 13.6% year-on-year (YoY). It had contracted 16.6% in the same month last year. 

The industrial output, measured by the Index of Industrial Production (IIP) rose by 29.3% in May (2021).