With headline inflation for July showing signs of moderation, retail inflation too is toeing a downward trend but analysts feel that this is not likely to continue for long.
According to data released by the government, retail inflation fell marginally to 9.86% in July on the back of base effect of fuel price hike last year and lower prices of spices and cereals. However, consumers continued to face the brunt of high vegetable prices.
“Similar to the WPI which posted a positive surprise with a sub 7% print, the lower reading was due to the fuel component. This was largely due to base effect of the fuel price hike last year which more than offset the uptrend in food prices,” Citi said in a note. This is the second consecutive month that retail inflation has eased.
The Consumer Price Index revealed that vegetable prices recorded the maximum rise of 27.33% followed by edible oils at 17.37% and pulses and its products at 12.49% during the month under review compared to the year ago period.
Retail inflation for June too has been revised downwards to 9.93% from the earlier 10.02 per cent. In May, retail inflation stood at 10.36 per cent. ENS