The NBS, in its latest consumer price index report, said, "The consumer price index, which measures inflation increased by 13.22 percent (year-on-year) in August 2020".
The retail inflation has grown beyond the Reserve Bank of India's (RBI) upper margin of 6 per cent. This hardening of consumer inflation above 6 per cent makes a further rate cut hard in RBI's monetary policy committee meeting in the first week of October, suggesting that the rate-cut cycle to propel growth may be paused.
However, in recent months, the central bank has shifted its focus to revival of economic growth from keeping inflation under control, in a move aimed at minimising the fallout from the coronavirus pandemic, which has impacted economic and business activity significantly.
The RBI's Monetary Policy Committee, headed by Governor Shaktikanta Das, adjusts key rates based on changes in inflation trends. Last month too, the government had revised the CPI data for June to 6.23 per cent from 6.09 per cent. Inflation in vegetables, pulses, eggs, and meat remained above 10 per cent in all these food categories. "The inflation figure for the fifth month in a row remains above RBI's medium-term target of 6 per cent, so RBI rate cut hopes still remains low at least at the October policy".
The wholesale price index (WPI) inflation stood at 0.16% in August against a contraction of 0.58% in July as inflation for the manufactured items accelerated to 1.27% from 0.51% during the same period.
The composite food index rose by 16 per cent in August, compared to 15.48 per cent in July, according to the statistics office. Experts said the sudden inflationary pattern in August indicates an improvement in purchasing power of manufacturers, and bodes well for economic recovery.