With falling prices of food and other retail items, the retail inflation in June touched a historic low of 1.54%. The dip in retail inflation for the period is highly affected by the falling prices of food items, including vegetables, pulses, milk and other processed food items. The announcement of falling inflation rate has also given hopes for a possible rate cut announcement by RBI in the coming month.
At the announcement of these figures, Arvind Subramanian, Chief Economic Advisor of the country, commented that the stability in macroeconomic activities has led to a steady fall in the inflation rate. He also mentioned that the announced figures are historically low. The last time such figures were seen in 1999 and 1978. However, the figures before 2012 were announced by a different organisation called CPI (IW), which worked on slightly different principles. The latest structure of customer price index was launched in 2012.
The inflation has been seeing a steep downfall since last few months. The inflation rate in May 2017 was 2.18 percent, whereas, last year in June, the inflation rate registered a figure of 5.77 percent.
According to the data, released by Central Statistical Institute, the inflation rate in food as a whole was -1.05% in May. The same got contracted to 2.12 percent in the latest month. Along with that, the inflation rate in vegetables declined to 16.53 percent and pulses saw the inflation rate getting lowered down to 21.92 percent.
CSI also stated that the prices of eggs have gone down, however, there has been a rise in the prices of protein-rich foods, including fishes and meat. Comparing the monthly rates saw fruits getting cheaper as well. The retail inflation on fuel and electricity was cut down to 4.54 from 5.46 percent in May.
Reserve Bank of India, takes account of the inflation and other factors while deciding the interest rates. The bank officials are slotted to meet earlier in August to discuss and announce their bi-monthly policy. The last time these officials met in June, they had kept the interest rates unchanged.