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The rise in consumer prices fell to 3.69% in August, after 4.17% the previous month, according to government data released Wednesday. This was the first time that retail inflation – determined by the Consumer Price Index (CPI) – was below India's 4% medium-term target for the Reserve Bank (RBI). this year. Wednesday's inflation data also fueled the expectations of a status quo on key interest rates during the upcoming review of the RBI's October policy. In a poll by the Reuters news agency, economists had predicted inflation of 3.86%.
Food inflation stood at 0.29 percent in August, down from 1.30 percent the month before, the central statistics office said in a statement.
Separate data showed that industrial production, as determined by the industrial production index (IPI), accelerated / slowed to 6.6% in July from 7% the previous month. The growth of industrial production, or the growth of industrial activity, is determined by the Industrial Production Index (IIP).
The data came at a time when the rupee has reached historically low levels due to weaker emerging-market peers and domestic equity markets struggling with cash outflows. In addition, the continued rise in crude oil prices has raised concerns among investors about the current account deficit.
"While the weakness of the rupee increases the risk of rising, factors such as still optimistic domestic food prices and the moderation of global commodity prices (with the exception of oil) should provide some relief," he said. Garima Kapoor, economist and vice-president. (What the economists say)
"Up to now, CPI-measured inflation has remained well within the RBI's expected trajectory, but the rupee's depreciation is raising concerns and rising interest rates could rise. support the motto. " The Reserve Bank of India (RBI) forecast a consumer price policy review in August of 4.6% in the second quarter and 4.8% in the second half of 2018-19.
Crude oil prices rose nearly 15% this year while the rupee depreciated 13% against the dollar. The rupee fell from its recent record low and closed at 72.19 against the dollar. Yet, it is the least performing Asian currency this year.
The current account deficit – or the difference between foreign exchange inflows and outflows – widened to $ 15.8 billion in April-June, compared with $ 15.0 billion in the corresponding period of the previous year. last year.
The credit rating agency Moody's forecasts that the current account deficit of the country will rise to 2.5% of GDP during the current fiscal year due to rising prices oil, accentuated by the depreciation of the rupee.
The trade deficit, or the gap between exports and imports, reached its highest level in five years, or $ 18 billion, in July. The trade deficit puts pressure on the current account deficit.
The central bank has increased the repo rate – the key rate at which it lends short-term funds to commercial banks – at its two previous bi-monthly policy meetings.
(With the contributions of the agency)
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