Retail inflation rises to 3.65% in August, Remains below RBI's 4% target

India's retail inflation climbed to 3.65% in August, up from the five-year low of 3.54% recorded in July, according to the official data released on Thursday. The food inflation, which accounts for around half of the overall CPI basket, accelerated to 5.66 per cent in August from a 13-month low of 5.42 per cent in the previous month, the data showed.With this announcement, the headline inflation has stayed within the Reserve Bank of India's (RBI) tolerance range of 2-6 per cent. However, it still remains away from RBI's target of "a durable 4 per cent," as stated by the central bank's Governor Shaktikanta Das.
Meanwhile, the prices of cereals (7.31 per cent) and protein-rich items like milk (2.98 per cent), meat & fish (4.30 per cent) decelerated during the month. The prices of pulses (13.6 per cent) decelerated, but remained in double-digit.Core inflation, which excludes the volatile food and fuel components, remained benign (3.5 per cent) even as the prices of clothing and footwear (2.72 per cent) and services like recreation (2.31 per cent), education (3.74 per cent), and health (4.10 per cent) saw slight uptick during the month. A weak rupee and the potential impact of monsoon-related issues are projected to sustain high inflation pressures in the immediate future, noted analysts.

(Writer is a Finance Research Analyst, based in Gandhinagar, Gujarat)