Retail Inflation Dips to Multi-Year Low: Causes and Outlook
UPSC Relevance
Prelims: Indian Economy (Inflation and its types - CPI, Core Inflation, Food Inflation; Monetary Policy Committee - MPC and its inflation target; Base Effect).
Mains: GS Paper 3 (Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment; Inflation).
Key Highlights from the News
Key Figure: India's retail inflation in July 2025 decreased to 1.55%. This is the lowest rate since June 2017.
Measurement: It is calculated based on the Consumer Price Index (CPI).
Significance: This rate is below the Reserve Bank of India's (RBI) target range of 2% to 6%.
Main Reason: A significant drop in food prices is the main reason for the decline in inflation. Food inflation was negative (-0.8%).
Favorable Factors:
High base effect due to high inflation rates in the previous year.
Good monsoon and strong kharif sowing are expected to increase agricultural production.
Core Inflation: Core inflation, excluding food and fuel prices, also decreased to 4.1%, close to RBI's 4% target.
Releasing Agency: The Ministry of Statistics and Programme Implementation (MoSPI) releases CPI data.
Future Challenge: If India has to stop buying cheap Russian oil due to American pressure, it might affect inflation.
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