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India's consumer price inflation slowed to a 59-month low of 3.54 per cent in July this year compared to the same month of the previous year to fall below the RBI’s medium-term target of 4 per cent for the first time in close to 5 years, data released by the Ministry of Statistics on Monday showed. 

The prices of cooking oil and spices declined by over 1 per cent during the month, easing the strain on household budgets, while the price rise for vegetables eased to 6.83 per cent during the month due to the increased supply in the market.

Vegetable prices had shot up by as much as 29.32 per cent in June as the scorching heat wave in the northern states hit production.

The prices of cereals increased by 8.1 per cent in July which was lower than the 8.65 per cent clocked during June.

Food inflation, which accounts for nearly half of the overall consumer price basket eased to 5.06 per cent in July as compared to 8.36 per cent in June.

ICRA chief economist Aditi Nayar said: "The food and beverages inflation eased to a 13-month low of 5.1 per cent in July 2024 after printing above the 7 per cent mark in each of the last eight months."

"With all the 22 essential commodities reporting an easing in their YoY inflation rates in August 2024 relative to July 2024, the food and beverages inflation print should ease further in the ongoing month, thereby dampening the headline CPI inflation to 3.4 per cent in August 2024. Nevertheless, the trajectory of perishable prices remains a key monitorable in the near term," she added.

The RBI has fixed a mid-term target of 4 per cent for retail inflation before it goes in for a cut in interest rates to rev up growth.

The RBI kept the key policy repo rate unchanged at 6.5 per cent for a ninth consecutive meeting on Thursday as it continues to maintain a balance between accelerating economic growth and keeping inflation under control.

RBI Governor Shaktikanta Das said the Monetary Policy Committee has decided by a 4:2 majority to keep the repo rate unchanged as inflation has risen above 5 per cent and is still above the targeted level of 4 per cent.

He said that inflation, after having eased to 4.8 per cent in April and May has risen to 5.1 per cent in June on the back of "stubbornly" high food prices.

"Without price stability, growth cannot be sustained so we have decided to continue with the disinflationary stance," Das explained.

However, the RBI Governor said that the country's inflation rate is expected to come down in the third quarter of the current financial year.