Consumer price inflation eases to five-year low of 3.54% in July

India's consumer price inflation drops to 3.54% in July, lowest in five years, with food prices moderating.

Inflation in India’s consumer prices eased to a nearly five-year low of 3.54% in July, with food price rise moderating to 5.4% from a six-month high of 9.4% in June, thanks to base effects from last July when retail inflation stood at 7.4% and the food index was up 11.5%.

Inflation faced by urban consumers dropped to just under 3% in July, from 4.4% in June, while rural consumers experienced a relatively higher price rise of 4.1%, down from 5.7% in June.

Food price rise was also higher in rural India at 5.9% compared with 4.6% in urban parts of the country. In June, rural food inflation was lower at 9.15% while urban food prices were up 9.6%.

“During the month of July 2024 there is a decline in inflation for all the groups. Significant decline is in the vegetables, fruits and spices subgroups,” the Ministry of Statistics and Programme Implementation said.

July’s inflation rate marks a sharp dip from the four-month high of 5.1% recorded in June, and is the slowest uptick in prices recorded since September 2019.. This also means that this is the first time since then that the inflation rate has gone under the 4% median target pursued by the Reserve Bank of India (RBI) in its monetary policy.

This is the first time in nine months that food inflation has dropped below 8%

At its latest monetary policy review last week, the RBI had retained the average inflation projection for this year at 4.5%, but had raised the estimate for the July to September quarter to 4.4% from 3.8% projected earlier. This suggests that price rise will regain momentum over this month and next, with an average inflation of over 4.8%.