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Indian Retail Inflation Eases to 6.83% in August

In August, India’s retail inflation, as measured by the Consumer Price Index (CPI), showed signs of moderation, dropping to 6.83% from 7.44% in July. However, it remained above the Reserve Bank of India’s (RBI) target range of 4+/-2%.

Factors Driving Inflation Drop:

Retail inflation eases; food prices still bite - The Hindu

    • Vegetable prices cooled, contributing to the decline in inflation.
    • August’s CPI is 61 basis points lower than July’s 15-month high.
    • Despite the decrease, it continues to exceed the RBI’s acceptable range.
    • This is the fourth instance of CPI breaching the RBI’s upper limit in 2023.

RBI’s Inflation Target:

The RBI’s medium-term inflation target is 2-6%, and they have projected CPI inflation at 5.4% for 2023-24.

Urban and Rural Inflation Trends:

  • Urban CPI: Urban CPI slowed to 6.59% from 7.20% in July.
  • Rural CPI: Rural inflation fell to 7.02% from 7.63% in the previous month.
  • Food Inflation: Food inflation, accounting for half of the CPI basket, rose to 9.94% from 2.91% in the previous month.

Inflation Trends Across Indian States in August 2023

Lowest Inflation in Delhi, Highest in Rajasthan

  • In August 2023, Delhi recorded the lowest inflation rate among all Indian states, standing at 3.09%.
  • Rajasthan, on the other hand, experienced the highest inflation rate in the country during the same period.

Regional Inflation Rates

Northern Region

  • Delhi: Reported the lowest inflation rate at 3.09%.
  • Jammu & Kashmir and Ladakh (Union Territories): Combined inflation rate stood at 5.45%.

Eastern Region

  • Assam: Registered an inflation rate of 4.01%.
  • West Bengal: Recorded an inflation rate of 4.79%.

Central Region

  • Chhattisgarh: Experienced an inflation rate of 5.52%.

Major States Inflation Rates

  • Across the majority of major states, the year-on-year (YoY) inflation rates for both rural and urban areas, as well as the combined rate, ranged from 6% to 8% in August 2023.

States with High CPI Inflation

  • In August 2023, four states reported Consumer Price Index (CPI) inflation rates exceeding 8%:
    • Rajasthan: Recorded the highest CPI inflation rate at 8.60%.
    • Telangana: Reported an inflation rate of 8.27%.
    • Himachal Pradesh: Also recorded an inflation rate of 8.27%.
    • Odisha: Experienced an inflation rate of 8.23%.

Detailed Commodity Price Movements:

  • Vegetables: Prices increased by 26.1% in August, compared to a staggering 37.34% rise in July.
  • Oils and Fats: Prices declined by 15.3%, following a 16.8% drop in the previous month.
  • Cereals: Prices remained in double digits, rising by 11.6% in August, compared to 13% in July.
  • Milk and Milk Products: Inflation came in at 7.7% compared to 8.34% in the previous month.

Data Collection Methodology:

  • Data Sources: The price data were collected from 1,114 urban markets and 1,181 villages, covering all states/union territories.
  • Data Collection Rate: In August 2023, data were collected from 99.6% of villages and 98.3% of urban markets.
  • Market-wise Prices: Market-wise prices were reported at 88.8% for rural areas and 91.3% for urban areas.

July’s Inflation Surge:

  • Context: In July 2023, retail inflation surged to a 15-month high of 7.44% due to rising food prices, particularly vegetables.

  • Food Inflation: The consumer food price index inflation rose to 11.51% in July, with food and beverages inflation reaching 10.57%.
  • Vegetable Inflation: Inflation in vegetables spiked to 37.34% from a deflation of -0.93% in June.

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Indian Retail Inflation Eases to 6.83% in August:_5.1


Indian Retail Inflation Eases to 6.83% in August:_6.1