MUMBAI: Retail inflation in July eased to 3.54%, marking a sharp decline after it rose in the previous month, falling below the Reserve Bank of India's medium-term target of 4%. The corresponding figure for consumer inflation last year had touched 7.4% in July 2023.

A press release by the Ministry of Statistics & Programme Implementation today said, "The year-on-year inflation rate based on the All India Consumer Price Index (CPI) number is 3.54% (Provisional) for the month of July 2024," and further added, "There is a sharp decline in the year-on-year inflation rate based on the All India Consumer Price Index (CPI) number for the month of July 2024, which is the lowest in the last 59 months."

The sharp drop in July comes after retail inflation had hit a four-month high of over 5% in June 2024. One of the major contributing factors behind the sharp drop in July was food inflation, which was the lowest since June 2023. During the month, inflation decreased across all food groups, with a notable drop in the prices of vegetables, fruits, and spices.

The government noted that in July 2024, the year-on-year inflation rate based on the All India Consumer Food Price Index (CFPI) was provisionally 5.42%. For rural areas, the rate was 5.89%, while in urban areas, it stood at 4.63%.

The relatively lower inflation is likely to assuage the concerns of the RBI, which has continued its efforts to sustainably lower it towards the 4% target by policy measures and has kept key rates unchanged. In the recent meeting of RBI's Monetary Policy Committee (MPC) on Aug 8, 2024, the central bank kept the repo rate unchanged, marking the ninth consecutive time that the benchmark rate remains at 6.5%.