India inflation: Delhi sees lowest inflation rate in India, price rise highest in Rajasthan

In a relief to consumers, the retail inflation in India eased in the month of August on the back of cooling vegetable and food prices. The CPI inflation, which hit a 15-month high of 7.44% in July, declined to 6.83% in August, the data released by the Ministry of Statistics and Programme Implementation on Tuesday showed.

Food inflation in the country, which accounts for nearly half of the overall basket, was up 9.94% in August compared with a rise of 11.51% in July.

Read here: India's retail inflation eases to 6.83% in August from 15-month high peak in July; remains above RBI's tolerance band

Among states, the inflation rate in Delhi was the lowest of all, while that in Rajasthan was the highest, the data showed.

The inflation rate in Delhi for the month of August 2023 was 3.09%, followed by Assam at 4.01% and West Bengal at 4.79%.

Inflation rate in the Union Territories of Jammu & Kashmir and Ladakh combined was at 5.45%, while in Chhattisgarh it was 5.52%, data by Press Information Bureau showed.

In the rest of the major states, the year-on-year (YoY) inflation rates of major states for rural, urban and combined for August 2023 ranged around 6-8%.

The CPI inflation rate in four states remained above 8% in August. These included Rajasthan at 8.60%, Telangana and Himachal Pradesh at 8.27% each and Odisha at 8.23%, showed the data.

Meanwhile, overall core inflation in the country came in at 41-month low of 4.8% YoY versus 5% in July. Core inflation was aided by favorable contribution from transport and communication (T&C) category and clothing & footwear.

Inflation in core services was unchanged at 3.9% YoY, lowest since November 2019.

Also Read: RBI likely to hold repo rate, focus on falling inflation trajectory over the rate of inflation: Economists

Economists believe the headline inflation to further moderate and fall below 6% in September.

“We believe that headline inflation could ease towards 5.7% YoY in September 2023 and ease towards 5% in 2HFY24. It means inflation of 5.4% YoY in FY24, higher than our previous forecast of ~4.5%. Thus, we expect RBI to keep interest rates unchanged in the foreseeable future,” said Nikhil Gupta, Chief Economist, Motilal Oswal Financial Services Ltd.

Mohit Ralhan, CEO - TIW CAPITAL also believes that the better-than-expected inflation data means that RBI will continue to hold the policy rate at its upcoming meeting.

“Core inflation hasn’t inched higher due to the transitory shock from vegetable prices. But the central bank will remain cautious given that the global crude benchmark, Brent, is holding above $90 per barrel, and rainfall has been less than normal in August,” Ralhan added.

Also Read: India inflation eases significantly in August. Is the worst behind?