At 7.44%, retail inflation soars to 15-month high
New Delhi, August 14
The Consumer Price Index-based based inflation surged to a 15-month high of 7.44% in July on the back of 11.51% rise in retail food inflation, according to the figures released by the National Statistical Office (NSO) on Monday.
The rise well above the RBI’s comfort band of 4-6% was mainly due to a sharp rise in the prices of vegetables, especially tomatoes, and cereals in urban areas.
Food inflation rises to 11.51%
- The CPI-based inflation in the food basket was at 11.51% in July, significantly up from 4.55% in the preceding month, and 6.69% in July 2022
- In July, the annual inflation in the vegetables basket was at 37.44%, spices at 21.63%, pulses and products at 13.27%, and cereals and products at 13%
- The food and beverages segment together contribute about 54% of the overall CPI
Retail inflation in June was recorded at 4.78%. Interestingly, rural inflation at 7.60% was higher than urban retail inflation of 7.20%. In June, on the other hand, rural inflation at 4.78% was lower than urban inflation of 4.96%.
In rural areas, the Consumer Food Price Index (CFPI) was lower mainly due to cheaper food, vegetables, cereals and meat but the rate of inflation in groups such as transport, communication, household services, footwear and medical was higher than urban areas.
The CPI inflation rate for July was much above economists’ projections of an expected 6.6% increase in prices. But after the figures were out, they felt it would not be sticky. “We expect this inflation rate to be short-lived as the long-term fundamentals of the Indian market remain strong. We may likely see the rate start softening up in the fourth quarter, once we approach the elections,” said Nish Bhatt of Millwood Kane.
