India inflation likely dropped to an eight-year low in July: Poll

India’s retail inflation likely eased to an eight-year low of 1.76% in July, mainly due to cooling food prices, according to a Reuters poll of economists. This figure falls below the Reserve Bank of India’s (RBI) tolerance band of 2% to 6% for the first time in over six years. Despite uneven monsoon patterns, a strong spring harvest has helped moderate food inflation, extending the country’s longest disinflationary period in more than a decade. The RBI maintained its policy rate at 5.5% on Wednesday, describing the inflation outlook as more benign.
The annual Consumer Price Index (CPI) growth is forecast to have eased from 2.1% in June to 1.76% in July, based on a survey conducted from August 4-8. This would mark the ninth consecutive month of declining inflation. Principal economist at HDFC Bank, Ms. Sakshi Gupta, noted that lower food inflation is driving the trend, supported by healthy supplies from the previous year. Core inflation, which excludes volatile items such as food and fuel, is expected to have dropped slightly to 4.2% in July from 4.3% in June. Inflation measured by the Wholesale Price Index (WPI) was forecast to have fallen to -0.3% in July from -0.13% in June. The favourable inflation environment provides the RBI with greater flexibility to support the economy amid external challenges, including increased US tariffs on Indian goods.

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