Inflation has reduced. After 59 months. Retail inflation rate remained below four percent in July. The last time the inflation rate was below four percent was in August 2019.
According to the data released on Monday, the retail inflation rate in July stood at 3.54%. Earlier in June it was 5.08%. Food inflation also came down from 9.36% to 5.42%. There has been relief from inflation due to falling prices of food items. A year ago in July, retail inflation rate was 7.44% and food inflation rate was 11.51%.
According to the government, the retail inflation rate on Consumer Price Index (CPI) has decreased. The inflation rate in urban areas was 4.39% in June, which decreased to 2.98% in July. At the same time, the inflation rate in rural areas was 5.66% in June. In July it came down to 4.10%.
What is the reason for decreasing inflation?
Food items account for almost half the increase and decrease in inflation. Food inflation has almost halved in July as compared to June. Due to this, there has been a big reduction in the inflation rate in July.
The food inflation rate in July 2023 was 11.51%. In July this year it came down to 5.42%. Whereas, in June it was 9.36%.
The inflation rate of vegetables was 6.83% in July, whereas it was 29.32% in June. Similarly, the inflation rate of grains decreased from 8.75% to 8.14%. At the same time, the inflation rate of pulses came down from 16.07% to 14.77%. Similarly, the inflation rate of fruits also reduced from 7.15% to 3.84%.
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What is inflation rate?
Inflation rate means the increase in the price of a good or service over time. It is measured by month and year. For example, some china was available for Rs 100 a year ago, but now it is available for Rs 105. Accordingly, its annual inflation rate was 5 percent.
The biggest disadvantage of increasing inflation rate is that it reduces the importance of currency over time. That is, if you have Rs 105 today, it was equal to Rs 100 a year ago.
Currently the inflation rate is calculated from the base price of 2012. This estimates how much you would have to spend today to buy the same thing that you could buy for Rs 100 in 2012.
In 2012, if you used to buy an item for Rs 100, today you will have to spend Rs 192.9 to buy the same item. Till a year ago you had to spend Rs 186.3. Since within a year you had to spend Rs 192.9 instead of Rs 186.3 to buy the same item, the annual inflation rate became 3.54%.
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How is inflation measured?
There are two indexes to measure inflation in India. The first is Consumer Price Index i.e. CPI. And the second is Wholesale Price Index i.e. WPI.
Retail inflation rate is calculated through CPI. At the same time, wholesale inflation rate is measured by WPI.
Common people like you and us, who buy the goods as consumers, buy them from the retail market. Through CPI, it is found out how expensive or cheap the goods are becoming in the retail market.
At the same time, businessmen or companies buy goods from the wholesale market. WPI reveals the changes in the prices of goods in the wholesale market.
In many countries of the world, WPI is considered the main standard for measuring inflation, but in India, CPI is considered the main standard.