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Retail Inflation continues to ease for the second consecutive month, 5.3% in August 2021

As per the recently released data, retail inflation for August 2021 eased for the second consecutive month to 5.3% from 5.6% in July

Retail Inflation continues to ease for the second consecutive month, 5.3% in August 2021
Retail Inflation continues to ease for the second consecutive month, 5.3% in August 2021 -
Consumer price index (CPI) inflation for August 2021 eased to 5.3% as per data released by the Ministry of Statistics and Programme Implementation today. This compares with a cooling off to 5.6% previous month after being above the RBI threshold of 6% for several months. 
 
The Reserve Bank of India (RBI) is mandated to contain retail inflation at 4%, +/- 2% on either side. CPI inflation was 6.26% in June and 6.73% in July 2020.
 
The Consumer Food Price Index (CFPI) for August eased to 3.11% from 3.96% in July. 
 
Inflation in cereals and products contracted 1.42% in August compared to a contraction of 1.75% in July. Inflation in meat and fish rose to 9.19% from 8.33% a month ago. Inflation in vegetables contracted 11.68% from a contraction of 7.75%. Inflation in pulses and products cooled to 8.81% from 9.04% in July. 
 
The core-CPI inflation eased to 5.5% in August from 5.7% in the previous month, led by miscellaneous items, especially personal care and effects, as well as pan, tobacco and intoxicants. 
 
"The cooling of food & beverages inflation was the chief driver behind the moderation in the CPI inflation to a four month low 3.8% in August 2021. In month-on-month terms, the food & beverages basket remained flat, with downticks in eggs, meat and fish, fruits, pulses and cereals, absorbing the upticks in milk, oils and fats, vegetables, sugar and spices," Aditi Nayar, chief economist, ICRA said.
 
The RBI has projected the CPI inflation at 5.7% during 2021-22 — 5.9% in the second quarter, 5.3% in third, and 5.8% in the fourth quarter of the fiscal, with risks broadly balanced. CPI inflation for for the first quarter of 2022-23 is projected at 5.1%.
 
"The stance and policy rate are likely to be left unchanged until strengthening domestic demand replaces supply-side constraints as the key driver of inflationary pressures... At present, we believe policy normalisation could commence in February 2022, with a change in the stance of monetary policy to neutral from accommodative, followed by a hike in the repo rate of 25 bps each in the April 2022 and June 2022 meetings," Nayar said.
 
Industrial output had risen to 11.5%  on a year-over-year basis, in the previous month.
 
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