Retail inflation eased to 6.83% in August after touching a 15-month high of 7.44% in July, mainly due to softening prices of vegetables.

Despite the lowering of consumer price index-based inflation, it still remains above the Reserve Bank of India's upper target zone of 6%.

The food basket inflation stood at 9.94% in August compared to 11.51% a month ago, according to data released by the National Statistical Office (NSO) on Tuesday.

Retail inflation based on CPI was at 7% in August 2022.

As per the data, inflation in the vegetable basket eased to 26.14% in August versus 37.4% in July.

Aditi Nayar, said that within food items, inflation in vegetables fell to 26.1 per cent in August from 37.4 per cent in the previous month, contributing as much as 28 basis points of the 61 basis points decline in the headline CPI inflation print between these months.

"Core inflation (CPI excluding food and beverages, fuel and light and petrol and diesel) eased marginally to 5.06% in August 2023 from 5.12% in the previous month. This was the third consecutive month of a dip in inflation of this metric," said Aditi Nayar, chief economist, head of research & outreach at rating agency ICRA.

The RBI has projected the CPI inflation at 5.4% for 2023-24, with an estimate of 6.2% for the second quarter, 5.7% for the third quarter and 5.2% in the fourth quarter, with risks evenly balanced.

The inflation for the first quarter is projected at 5.2%.

Headline inflation fell to 4.8% in June 2023 from the peak of 7.8% in April 2022. However, it surged to 7.4% in July, mainly on account of a spurt in vegetable prices which have already started moderating.