Retail inflation has risen to 7 per cent in August due to costlier food items. This information has been received from government data released on Monday.

Big blow on the retail inflation front!  increased by seven per cent in August

Retail inflation has risen to 7 per cent in August due to costlier food items.

Retail inflation has risen to 7 per cent in August due to costlier food items. This information has been received from government data released on Monday. It was 6.71 per cent in July a month ago. Inflation based on the CPI remained above the upper limit of the reserve’s satisfactory level for the eighth consecutive month. The government has given the responsibility of keeping the retail inflation between two percent to six percent to the RBI.

According to the data, the inflation rate of food articles stood at 7.62 percent in August, which was 6.69 percent in July. At the same time, it was 3.11 percent in August last year.

Retail inflation higher than the figure set by RBI

The Reserve Bank of India (RBI), while deciding its bi-monthly monetary policy, mainly looks at the CPI based inflation. The government has asked the RBI to keep it at 4 per cent, with a tolerance band of 2 per cent on both sides. In July also, this figure was higher than the RBI’s tolerance level of 6 per cent. Let us tell you that CPI-based retail inflation has remained above the figure of 6 percent for the last eight months.

In the first three months of the current fiscal, retail inflation was over 7 per cent. The central bank has kept the inflation rate for the current financial year stable at 6.7 percent.

What is CPI based inflation?

Let us tell you that when we talk about inflation rate, here we are talking about inflation based on Consumer Price Index (CPI). The CPI tracks the change in retail prices of goods and services that households buy for their daily use.

To measure inflation, we estimate the percentage increase in the CPI during the same period last year. RBI keeps an eye on this figure to keep the prices stable in the economy.

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The CPI measures the retail prices for a particular commodity. These are seen at the level of rural, urban and all over India. The change in price index over a period of time is called CPI based inflation or retail inflation.

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