Retail inflation marginally increased to 3.65 per cent in August and remained within the Reserve Bank’s target of 4 per cent, the government data showed on Thursday.

The Consumer Price Index (CPI) based retail inflation was 3.6 per cent in July 2024 and 6.83 per cent in August 2023. Inflation in the food basket was 5.66 per cent in August, marginally up from 5.42 per cent in July, according to the data released by the National Statistical Office (NSO). The inflation also was below 4 per cent in July.

The government has tasked the Reserve Bank of India (RBI) to ensure that the CPI inflation remains at 4 per cent with a margin of 2 per cent on either side.

The combined inflation (rural and urban) fell to 3.65% in August 2024, compared to 6.83% in August 2023. However, it has increased by 110 basis points when compared to the previous month’s 3.54%.

This was the second time in nearly five years that overall retail inflation fell below the Reserve Bank of India’s 4% inflation target. The last time was July 2024.

 The RBI’s inflation target is 4% with a tolerance band of +/- 2 percentage points, meaning that the target is within the range of 2% to 6%.

 Urban inflation fell to 3.14% in August 2024, compared to 6.59% in August 2023.  Rural inflation fell to 4.16% in August 2024, compared to 7.02% in August 2023.

The combined Consumer Food Price Index (CFPI), which shows food inflation was 5.66% in August 2024, compared to 9.94% in August 2023. Urban food inflation fell to 4.99% in August 2024, compared to 10.42% in August 2023.

Rural food inflation fell to 6.02% in August 2024, compared to 9.67% in August 2023.

Tomatoes have exhibited the lowest year on year inflation (-47.91%) as well as lowest MoM change in index (-28.8%).

The prices of vegetables rose the most by 10.71%, compared to the other item categories. In urban areas, the rise was 13.22% and in rural areas, it was 13.22%.

Bihar witnessed the highest combined inflation among all Indian states in August 2024 at 6.62%, followed by Odisha at 5.63% and Assam at 5.03%.

On the other hand, Telangana had the lowest combined inflation of 2.02% followed by Uttarakhand at 2.37% and Delhi at 2.52%.