Retail inflation in July at five-year low of 3.54%

Food prices, which have been elevated for over a year, rose 5.42% in the month on-year, the lowest since June 2023, on the back of slowing inflation in vegetables. Yet, vegetable prices were still elevated at 6.83%, compared to 29.32% a year ago.

The base effect is a statistical outcome that makes any economic value, such as GDP or inflation, appear high if it had been compared to a previous corresponding period when the value was too low and vice versa.

Sticky food inflation, which have knocked household budgets, has been a key concern of the Reserve Bank of India and July’s inflation print will come as a big respite for the central bank. On August 8, the central bank kept its benchmark repo rate unchanged at 6.5% for the sixth straight meeting, staying focused on anchoring inflation.