Retail inflation eases to 5.59 per cent in July

Retail inflation eased significantly to 5.59 per cent in July 2021 from 6.26 per cent in June as food prices dropped. The fall in Consumer Price Index (CPI) inflation was in sharp contrast to May 2021, when it had risen sharply to 6.30 per cent due to supply chain disruption owing to the second wave of the Coronavirus pandemic. The data indicates that retail inflation is back within the Reserve Bank of India's (RBI) target range of 2-6 per cent. An earlier poll of economists, conducted by news agency Reuters, pegged the retail inflation at 5.78 per cent.

Lower retail inflation will provide some breathing room to RBI as it decided to maintain an accommodative stance in its latest monetary policy review. While retail inflation eased in July, experts are worried about the future inflation trajectory, given the high fuel prices and inputs costs. Meanwhile, the country's factory output in June fell to 13.6 per cent, compared to 29.3 per cent in May, according to government data. The Index of Industrial Production (IIP) had contracted 16.6 per cent in the corresponding period last year.As per data, the mining output climbed 23.1 per cent while power generation increased by 8.3 per cent in June. During the first quarter of the year, IIP grew 45 per cent against a contraction of over 35 per cent during the corresponding quarter in 2020.