So with this good news, the Finance Ministry may indirectly be pushing the RBI to reduce interest rates in the monetary policy next month.
Measured by Consumer Price Index (CPI), Retail inflation was low in May 2017 at 2.18 percent while retail inflation was 5.77 percent in June 2016. Low inflation rate indicates poor demand and weak economic activity.
Retail inflation at 1.54 percent is a historically low. It reflects the firms and consolidation of macro-economic stability.
The Reserve Bank of India forecasted higher than the actual inflation rate so it opens scope for rate cut in next monetary policy which will be on 2 August 2017.
In June, RBI lowered the inflation expectation for 2017-18 to 2-3.5 percent for April-September first half. The year-on-year CPI inflation eased sharply to a series-low 3.0 percent in April 2017, due to food inflation. Inflation numbers continued to plunge to lower levels through May and June.
Consumer food price inflation was 2.12 percent in June 2017, compared to 0.69 percent in May 2017.Consumer food price inflation is a metric to measure changes in monthly kitchen cost.
With a disinflation in the prices of pulses and vegetables bring the sharp fall in food inflation rate. Vegetables prices fell witnessed a negative growth in June as compared to May.
While housing inflation is almost flat, growing 4.70 percent in June from 4.84 percent in May.
Fuel inflation was 4.84 percent in June while it was 5.46 percent in May. As from 1 July, GST is applied in Indian economy, it forced shops to de-stock and clear the inventory with discounts before July 1. After GST implied, clothing and footwear inflation fell to 4.17 percent in June from 4.41 percent in May.
Meaning of Retail Inflation:
Retail inflation means the increase in prices of some products or commodities compared to a base price.
In Indian economy, retail inflation is measured by Consumer Price Index. It is managed by Ministry of Statistics. Government and central banks use this CPI as a macroeconomic indicator of inflation.
This post has been seen 213 times.