Food items became cheaper, retail inflation came down to 6.7% in July. Retail inflation dips to 6.7% in July, but still out of RBI limits | NewsBust Food items became cheaper, retail inflation came down to 6.7% in July. Retail inflation dips to 6.7% in July, but still out of RBI limits | NewsBust

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Food items became cheaper, retail inflation came down to 6.7% in July. Retail inflation dips to 6.7% in July, but still out of RBI limits

By Amit - August 12, 2022

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New Delhi17 minutes ago

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The common man has got relief on the inflation front in July. According to government data released on Friday, the Consumer Price Index (CPI) based retail inflation declined to 6.7% in July. It was 7.01% in June. This is the lowest level of inflation in 5 months.

Inflation has come down due to the fall in the prices of food items. Food inflation rose to 6.75% in July from 7.75% in June. It was 7.97% in May and 8.38% in April.

However, this is the 7th consecutive month that retail inflation has crossed the RBI’s upper limit of 6%. Retail inflation was recorded at 6.01% in January 2022, 6.07% in February, 6.95% in March, 7.79% in April and 7.04% in May.

How does inflation affect?
Inflation is directly related to purchasing power. For example, if the inflation rate is 7%, then the value of Rs 100 earned would be just Rs 93. Therefore, one should invest only keeping in view the inflation. Otherwise the value of your money will be reduced.

Today, interest rates are negative in almost every country except Russia and Brazil. A negative interest rate means that fixed deposits earn interest less than the inflation rate.

How does inflation increase or decrease?
The rise and fall of inflation depends on the demand and supply of the product. If people have more money, they will buy more things. By buying more things, the demand for things will increase and if there is no supply according to the demand, the price of these things will increase.

In this way the market becomes vulnerable to inflation. Simply put, excessive flow of money in the market or shortfall of things causes inflation. On the other hand, if demand is low and supply is high, inflation will be low.

How does RBI control inflation?
To reduce inflation, excessive liquidity in the market is reduced. For this, the Reserve Bank of India (RBI) increases the repo rate. Concerned about rising inflation, RBI recently increased the repo rate by 0.50%. With this the repo rate has increased from 4.40% to 4.90%.

What is CPI?
Many economies around the world consider the WPI (Wholesale Price Index) as their basis for measuring inflation. This does not happen in India. In our country, along with WPI, CPI is also considered as a scale to check inflation.

The Reserve Bank of India considers retail inflation as the main standard, not wholesale prices, for setting monetary and credit related policies. WPI and CPI influence each other in the nature of the economy. In this way the WPI will increase, so the CPI will also increase.

How is the rate of retail inflation determined?
Apart from crude oil, commodity prices, manufacturing costs, there are many other things that play a vital role in determining the retail inflation rate. There are about 299 items, on the basis of whose prices the rate of retail inflation is decided.

There is more news…

Amit

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