Retail Inflation Drops to 3.54% in July, Lowest in Nearly 5 Years

New Delhi: Retail inflation in India dropped to 3.54% in July 2024, marking a significant decline from the previous month’s figures and bringing it below the Reserve Bank of India’s (RBI) medium-term target of 4%. This marks the lowest inflation rate in nearly five years.

According to government data, the All India Consumer Price Index (CPI) for July showed a year-on-year inflation rate of 3.54% (provisional), with rural inflation at 4.10% and urban inflation at 2.98%.

This sharp decline follows a four-month high of over 5% in June 2024. A significant factor behind the drop was a decrease in food inflation, which reached its lowest level since June 2023. Notably, prices of vegetables, fruits, and spices saw a considerable reduction.

The All India Consumer Food Price Index (CFPI) indicated a provisional inflation rate of 5.42% for July, with rural areas experiencing a rate of 5.89% and urban areas 4.63%.

This decline in inflation is likely to ease market concerns and provide relief to the RBI, which recently maintained its key interest rates unchanged. Investors may view this development positively, raising hopes for a potential rate cut in the near future.