NEW DELHI: India’s retail inflation stayed nearly steady in July halting an eight month surge despite firmer food prices as oil price continued to stay subdued, data released by the National Statistics Office (NSO) showed on Tuesday. Consumer food price inflation inched upto 2.36% in July, compared to an upwardly revised 2.25% in June.
Crude oil price has been benign in recent past. In international markets, Brent crude futures were up 8 cents, or 0.14%, from the previous settlement at $58.65 a barrel on Tuesday, Reuters reported from London.
Retail inflation measured by changes to Consumer Price Index (CPI) stood at 3.15% in July, marginally below the 3.18% reported in June.
Retail inflation staying within the RBI’s comfort range of 4% within a band of plus or minus 2% could encourage the central bank to consider a further reduction in policy rates considering the deceleration in industrial output seen in June owing to a slowdown in manufacturing and mining output. Data released last week showed that factory output as measured by index of industrial production (IIP) had inched up 2% in June, compared to 3.1% in May and 7% in June last year.
The central bank had cut its repo rate four times so far this year amid benign inflation and sobering signals from economic indicators to stimulate growth, which had fallen to its slowest pace in nearly five years in the March quarter. Indian economy which expanded at 8% in the first quarter of FY 19 subsequently slowed down to 5.8% in the fourth quarter ending March 2019.
With the slowdown in growth rate affecting profits and jobs, businesses are expecting fiscal measures from the government to stage a turnaround.
“The slowdown is continuing. Monetary stimulus is being given. For fiscal stimulus, there is not much legroom for the government due to the FRBM targets. Monsoon and oil prices have turned out to be favourable recently. We expect economic growth rate to see some improvement in the second half of this fiscal,said Crisil chief economist D.K. Joshi.