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There is news of relief on the inflation front. Retail inflation is expected to remain at 6.65 per cent for the month of July. If that happens, it will be the lowest rate in five months. Inflation is expected to come down due to fall in food prices and reduction in tax on fuel.
Barclays has said in its report that there may be a decrease of 0.36 percent in July as against 7.01 percent in June. The inflation data for July will be released on August 12. Earlier in April, the rate of retail inflation had reached an 8-year high of 7.79 percent.
Duty on petrol and diesel was reduced in May
The government had reduced excise duty on petrol and diesel in May. This is expected to bring relief on many fronts with food items. Rahul Bajoria, Chief Economist, India, Barclays, said there are a number of factors that are expected to reduce retail inflation. Also, by October, it can come under the RBI’s fixed ambit.
Inflation will decrease further in two to three months
Barclays said, RBI will also get relief due to reduction in inflation rate. It is expected that it will continue to decrease for the next two to three months. The possibility of a fall in prices on the front like edible oil, cooking gas will also reduce now. However, it said that there may be some damage due to floods in some parts of the country last month.