Economic Update: The government has received two significant pieces of good news on the economic front. Due to a decrease in the prices of food items, retail inflation saw a substantial drop in July.
The retail inflation rate fell to 3.54% year-on-year in July, down from 5.08% in June.
In fact, by July 2023, retail inflation had risen to 7.44%. However, in July 2024, the retail inflation rate reached its lowest in 59 months, or approximately five years. The last time retail inflation was below 4% was in September 2019.
Retail inflation has now fallen below the Reserve Bank of India's (RBI) target of 4%. The government has tasked the RBI with keeping retail inflation at 4% with a permissible variation of plus or minus 2%.
According to data from the National Statistical Office (NSO), food inflation was 5.42% in July, down from 9.36% in June. The last time retail inflation was below 4% was in September 2019.
The prices of food items, which contribute nearly 50% to inflation, decreased to 5.42% in July, down from 9.36% in June and 11.51% in July 2023. Vegetable inflation was 6.83% in July, compared to 29.32% in June.
The prices of grains and pulses increased by 8.14% and 14.77%, respectively. Fuel and light prices saw a 5.48% decline in July, following a 3.66% decrease in June.
Industrial Production Data
In addition to the good news on inflation, the economy has also received a boost from industrial production data. The country's industrial production grew by 5.2% in the April-June quarter, up from 4.7% in the same quarter last year.
In June, industrial production increased by 4.2% due to strong performance in the mining and electricity sectors. Official data released on Monday showed that in June last year, industrial production had grown by 4%.
According to government data, the manufacturing sector grew by 2.6% in June, compared to 3.5% in the same month last year. During the same period, the mining sector saw a growth rate of 10.3%, while the electricity sector grew by 8.6%.
