India’s retail inflation eased marginally to 3.15 % in July from 3.18% in June on the back of high food prices. The number, however, remained below RBI’s 4% for the 12th straight month, despite recent interest rate cuts. Delayed monsoon had pushed the number to an 8-month high of 3.18 per cent in June.

As per the data released by the Central Statistics Office (CSO), the inflation in the food basket was 2.36 per cent in July, marginally up from 2.25 per cent in the previous month.

The consumer inflation data supports the Reserve Bank of India‘s decision this month to cut the repo rate to a nine-year low of 5.4 per cent. Repo rate is the key interest rate at which the RBI lends short-term funds to commercial banks.

Analysts expect the central bank to cut rates once again in its scheduled bi-monthly review due in October. The RBI has so far this year reduced the key lending rate by 110 basis points – or 1.1 percentage point.


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