Retail inflation eases to eight-year low of 1.55% in July
Retail inflation measures the change in consumer prices in a month on a year-on-year basis.
The Reserve Bank of India is tasked with keeping inflation at 4%, with a tolerance band between 2% and 6%.
This is the first time since the Covid-19 pandemic that the country's retail inflation has fallen below this tolerance band, Reuters reported.
The Centre attributed the decrease in headline and food inflation in July to lower price rise in pulses, vegetables, eggs, sugar, transport and communication.
Data from the government that was released on Tuesday has also shown that inflation in India has been easing for nine consecutive months, which will allow the Reserve Bank of India's Monetary Policy Committee to further cut interest rates.
On August 6, the Reserve Bank of India's Monetary Policy Committee decided to keep the repo rate unchanged at 5.5%.
The repo rate is the interest rate at which the central bank lends money to commercial banks. The Monetary Policy Committee reviews the rate every two months.
Central banks typically increase key lending rates at times of high inflation in economies. Higher key lending rates translate into high interest on loans disbursed by commercial banks. This, in turn, keeps a check on discretionary spending by consumers.
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