Retail inflation in August, based on the Consumer Price Index (CPI), marginally eased to 5.3 per cent, staying within the Reserve Bank of India’s (RBI) comfort zone for a second month, government data showed on Monday. 

The retail inflation was 5.59 per cent in July and 6.69 per cent in August 2020. According to the data released by the National Statistical Office (NSO), inflation in the food basket was 3.11 per cent in August compared to 3.96 per cent in the preceding month. 

Inflation is within the RBI’s 2-6 per cent comfort range for a second month. But it has been above the medium-term target of 4 per cent for nearly two years.

“The price data are collected from representative and selected 1,114 urban markets and 1,181 villages, covering all States and Union Territories through personal visits by field staff of Field Operations Division of NSO and MoSPI on a weekly roster. During the month of August 2021, NSO collected prices from 99.7 per cent of village markets and 98.6 per cent of urban markets, while the market-wise prices reported therein were 87.1 per cent for rural and 87.4 per cent for urban,” said the Ministry of Statistics and Programme Implementation (MoSPI) in a statement. 

Last month, the central bank had held its monetary policy loose, but cited concerns about inflationary pressures on the economy. The RBI has projected the CPI inflation at 5.7 per cent during 2021-22 – 5.9 per cent in the second quarter, 5.3 per cent in the third and 5.8 per cent in the fourth quarter of the financial year with risks broadly balanced.  

“Inflation surprised on the downside in August compared to consensus expectations. The softness was led by lower food inflation, especially in cereals, sugar and vegetable categories. Core inflation also dropped below 6 per cent after remaining elevated for the last few months. Fuel inflation continued to play spoilsport at almost 13 per cent in the month. Inflation readings could remain contained for the next two to three months, in part supported by a high base, before inching up to 6 per cent from December onwards,” HDFC Bank Senior Economist Sakshi Gupta told the Reuters.