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July retail inflation slows to 9-month low at 4.17%
Why in the news ?
- As per the data released by the Central Statistics Office, Retail inflation decelerated to 4.17 per cent in July from 4.92 per cent a month ago in the wake of softening food prices.
Details
- Retail inflation had increased by 2.36 per cent in July last year and slowed from the 4.92% pace set in last month.
- The CSO data revealed that inflation in vegetables declined by (-) 2.19 per cent last month, compared to 7.8 per cent in June.
- The rate of price rise in fruits slowed down 6.98 per cent, as against over 10 per cent in the previous month.
- Also the rise in global fuel prices has led to a continuous increase in inflation in the fuel and light segment.
- Growth in the fuel and light category accelerated to 7.96% in July, from 7.22% in June.
- The Reserve Bank of India (RBI) in its monetary policy review on August 1 had increased its policy rate by 25 basis points for the second time in two months, blaming rising inflation risks.
- The RBI also raised its inflation outlook to 4.8 per cent in the second half (October-March) of 2018-19 from its earlier projection of 4.7 per cent.
Inflation
- Inflation is defined as a sustained increase in the general level of prices for goods and services in a county
- Demand-Pull Inflation – Inflation is caused by the overall increase in demand for goods and services, which bids up their prices.
- This theory can be summarized as "too much money chasing too few goods".
- Cost-Push Inflation – Inflation is caused when companies' costs of production go up. When this happens, they need to increase prices to maintain their profit margins.
- Increased costs can include things such as wages, taxes, or increased costs of natural resources or imports.
Consumer Price Index (CPI)
- The Consumer Price Index (CPI) measures changes in the price level of a 'market basket' of consumer goods and services purchased by households.
- The CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically.
- In India, retail inflation is linked to Consumer Price Index(CPI) which is managed by Ministry of Statistics.
Source
The Hindu, Indian Express