India's retail inflation eases in July, government vows to take steps

<p style="text-align: center;"><img src="/ueditor/php/upload/image/20210813/1628829071128910.png" title="1628829071128910.png" alt="3.png"/></p><p>Indian&nbsp;retail inflation&nbsp;eased in July after holding above 6% for two months in a row, helped by improving supplies following the lifting of pandemic restrictions, and the government said it would take all necessary steps to contain rising prices.<br/><br/>Consumer prices rose 5.59% in July from the same month last year, lower than June&#39;s 6.26% annual&nbsp;inflation rate&nbsp;and below a Reuters poll forecast of 5.78%, data released by&nbsp;Ministry of Statistics&nbsp;showed on Thursday.<br/><br/>Food prices, which account for nearly half of the inflation basket, rose 3.96% year-on-year in July from 5.15% a month before.</p><p><br/></p><p>The&nbsp;Reserve Bank of India&nbsp;(RBI) held its repo rate at a record low last week, but it raised its inflation forecast amid signs that policymakers could be edging closer to tapering pandemic-induced stimulus.<br/><br/>But allaying these fears, Nirmala Sitharaman, India&#39;s finance minister, told industrialists on Thursday that the economy had not so far reached the level where financial liquidity support could be withdrawn by the central bank.<br/><br/>Some economists said Thursday&#39;s July inflation print was within the range of the central bank&#39;s 2%-6% target and that price pressures appeared to be easing.<br/><br/>&quot;Today&#39;s print provides some breather to policymakers with inflation falling back within the target band,&quot; said Garima Kapoor, an economist for institutional equities at Elara Capital.<br/><br/>However, she said, the expected trajectory of inflation was likely to compel the central bank to normalise policy towards the end of the fiscal year.<br/><br/>Inflation has heated up this year as many companies passed on rises in their input costs like steel, cement and fuel to consumers amid a pickup in overseas demand.<br/><br/>Retail fuel and electricity prices rose 12.38% in July while transport costs climbed 10.54% from a year ago, the data showed. However, the prices of cereals, vegetables and sugar fell in July.</p><p><br/></p><p>The latest inflation figures come amid a fall in COVID-19 infections, and a pickup in the pace of vaccinations in the country, although many policymakers are still worried about the possibility of a third wave of the pandemic.<br/><br/>Core inflation, excluding volatile food and fuel costs, was estimated at between 5.94% and 6.1%, according to three economists, compared with 6.1% to 6.2% in June.<br/><br/>The Indian government does not release core inflation numbers.</p>