Consumer Inflation Eases To 3.15% In July



The number is well below the Reserve Bank of India's (RBI's) target of 4 per cent. Inflation based consumer price index stood at 3.05 per cent in May 2019 and 4.17 per cent in July past year. Consumer inflation last month was lower than economists' estimates.

The core consumer price index, which excludes food and energy, rose 0.3% from the prior month, and 2.2% from a year earlier, according to a Labor Department report Tuesday.

Retail or consumer price index (CPI) inflation fell to 3.15 per cent in July from 3.18 per cent in June, data released by government on Tuesday showed.

"With inflation close to target and equity markets likely to rally hard on a positive trade outcome we could end up seeing a significant re-evaluation of the outlook for monetary policy later this year that also results in a sharp correction higher in Treasury yields". President Donald Trump has repeatedly cited low inflation in his attacks on the Fed and calls for deeper interest-rate cuts, and he tweeted after the CPI data that the tariffs aren't actually boosting prices.

The 2.2 per cent annual gain in the core CPI followed 2.1 per cent in June and marked the fastest increase since January.

Tariffs on a wide range of consumer products imported from China, set to take effect September 1, may boost inflation further. The index rose an annualized 2.8% over the past three months, the most since early 2018.

While the Fed officially targets inflation including all items, policy makers look to the core measures for a better sense of the underlying trend because food and energy prices tend to be volatile. Shelter costs, which make up about a third of total CPI, rose 0.3% for a second month, while medical care was up 0.5%, apparel advanced 0.4% and used cars and trucks rose 0.9%. A national gauge of retail gasoline prices was up on average during the month though it has declined since mid-July. "This is the second 0.3% monthly increase in a row, something that hasn't happened since 2001". Higher inflation tends to eat into wage gains.

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