Retail inflation hits 5-month high of 3.36 per cent

Last month, the RBI had cut its key lending rate by 25 basis points to 6 per cent in view of softening inflation. The next monetary policy review is due on October 4. The August inflation number is the highest since March 2017, when it was recorded at 3.89 per cent. 

Overall food inflation in August also moved up, reversing the deflationary trend, to 1.52 per cent, government data showed today. Daily consumables like fruits and vegetables turned costlier during the month with inflation print coming at 5.29 per cent and 6.16 per cent, respectively as against 2.83 per cent and (-)3.57 per cent in July, as per data released by the CSO. Likewise, prepared meals, snacks and sweets as a category turned dearer with the rate of price rise at 1.96 per cent from 0.43 per cent in July. 

Also, transport and communication means were costlier during the month with inflation rising to 3.71 per cent from 1.76 per cent in July. However, items such as cereals and products, meat and fish, oils and fats became cheaper at inflation prints at 3.87 per cent, 2.94 per cent and 1.03 per cent, respectively.  

Meanwhile, industrial production grew a meagre 1.2 per cent in July from 4.5 per cent a year ago, bearing the brunt of a dismal show of the manufacturing sector – especially that of capital goods – putting pressure on RBI to lower rates further. Factory output measured in terms of index of industrial production had declined by 0.2 per cent in June, according to revised estimates released by the CSO. 

During April-July, IIP grew by 1.7 per cent, down from 6.5 per cent in the same period last year. Growth of the manufacturing sector, which makes up 77.6 per cent of the index, decelerated sharply to 0.1 per cent in July compared to 5.3 per cent in the same period of 2016.