India's Inflation Rate Remains High

India's inflation rate witnessed a slight decrease in August, although it continues to hover at a relatively high level due to elevated food prices in the country.

According to preliminary government data released on Tuesday, the consumer price index rose by 6.83% compared to August 2022, marking a slight improvement from the previous month's rate of 7.44%.

Economists had predicted a lower rate of 7.0%, making the actual reading better than expected, according to a FactSet poll conducted prior to the release of the data.

Despite this improvement, price increases still exceed the Reserve Bank of India's target range of 2%-6%. Although the prices of food and beverages, which constitute a major portion of the index, experienced a slight decrease to 9.19% after soaring in double digits in July, they remained comparatively high. On the other hand, other sectors such as clothing, housing, and fuel recorded milder price increases in August.

Considering this overall scenario, policymakers at the central bank may contemplate raising interest rates in order to expedite the reduction of inflation. In the previous month, the bank decided to maintain its benchmark rate at 6.5%.