Retail inflation has come down to 3.54% in the month of July. This is the lowest level of 59 months. Inflation in August 2019 was 3.21%. Whereas in the month of June, inflation was 5.08%. Inflation has come down due to falling prices of food items. Inflation is now within RBI’s target of 2-4%.
Due to fall in prices of grains, fruits, vegetables, pulses and spices, food inflation rate has come down from 9.36% to 5.42%. At the same time, urban inflation also came down from 4.39% to 2.98% on month-on-month basis. Rural inflation has declined from 5.66% to 4.10%.
Food inflation was 11.51% in July 2023, now it came to 5.42%
Food items contribute about 50% to the inflation basket. Its inflation has decreased from 9.36% to 5.42% on month-on-month basis. Whereas a year ago, in July 2023, food inflation was 11.51%. That means, it has also decreased on annual basis.
The inflation rate of vegetables stood at 6.83% in July, whereas in June the rate was 29.32%. Cereals and pulses form an important part of the Indian staple diet. Its inflation has come down to 8.14% and 14.77%. Inflation of fuel and light has also decreased.
RBI had kept the inflation estimate at 4.5% for this financial year
During the recently held Monetary Policy Committee meeting, RBI had kept its inflation estimate for this financial year unchanged at 4.5%.
RBI Governor had said – Inflation is coming down, but the progress is slow and uneven. India’s inflation and growth trajectory are moving forward in a balanced manner, but it is important to remain vigilant to ensure that inflation remains on target.
How does inflation affect?
Inflation is directly related to purchasing power. For example, if the inflation rate is 6%, then Rs 100 earned will be worth only Rs 94. Therefore, investment should be made only keeping inflation in mind. Otherwise the value of your money will reduce.
How does inflation increase and decrease?
The rise and fall of inflation depends on the demand and supply of the product. If people have more money they will buy more things. Buying more things will increase the demand for things and if the supply is not as per the demand, the price of these things will increase.
In this way the market becomes vulnerable to inflation. Simply put, excessive flow of money or shortage of goods in the market causes inflation. Whereas if demand is less and supply is more then inflation will be less.