NEW DELHI, Aug 12 Reuters India39;s retail inflation fell in July to a near fiveyear low, as food inflation eased from previous highs due to a base effect, government data showed on Monday.

Annual retail inflation was 3.54 in July, down from 5.08 in June. The latest print is the lowest since August 2019.

Economists polled by Reuters had forecast inflation at 3.65, based on a higher print in July last year when inflation hit a 15month peak of 7.44.

Retail inflation fell below the Reserve Bank of India39;s RBI target of 4 largely due to the highbase effect, suggesting the slower pace of price rises was temporary. The inflation rate was last recorded below 4 in September 2019.

Moderation in retail inflation was on expected lines. A favourable base from last year largely pulled down the headline inflation below 4, said Swati Arora, economist at HDFC Bank.

Prices of food, which account for nearly half of the retail inflation, rose 5.42 from last year in July, compared to a 9.36 rise in June.

Vegetable prices rose 6.83 yearonyear in July against 29.32 in the previous month.

The inflation rate for cereals was 8.14 in July compared to 8.75 in the previous month, while that of pulses was 14.77 during the month from 16.07 in June.

On a sequential basis, food momentum continued to remain high largely due to high vegetable and pulses prices, Arora said.

India39;s central bank kept its key interest rate unchanged for a ninth straight policy meeting last week, focusing on…