India’s retail inflation in July soars to 15-month high of 7.44%

India’s retail inflation rose to a 15-month high in July on account of high prices of vegetables and other food items, official data showed on Monday (Aug 14).

According to the data released by the National Statistical Office (NSO), retail inflation, as measured by the consumer price index, was 7.44 per cent in July this year. In the previous month, it was 4.87 per cent, and 6.71 per cent in July last year.

Inflation in the consumer food price index rose to 11.51 per cent in July while inflation in the food and beverages basket jumped to 10.57 per cent.

Retail inflation in vegetables surged to 37.34 per cent last month from a deflation of -0.93 per cent in June.

Inflation was also witnessed in different components of the food basket.

While food and beverage inflation soared to 10.57 per cent, compared to 4.63 per cent last month, cereals recorded 13.04 per cent inflation from 12.71 per cent in June.

For fuel and light, the inflation was at 3.67 per cent in July. Rural inflation came in at 7.63 per cent, compared to 4.72 per cent in June, while urban inflation stood at 7.2 per cent, rising from 4.96 per cent in June.

A poll of 53 economists conducted by Reuters had estimated the headline inflation would surge up to 6.40 per cent on an annual basis on rising food prices.

The data comes days after the Reserve Bank of India’s Monetary Policy Committee meeting, which has suggested that inflation would continue to remain high in August as well.

However, the RBI said, “While the vegetable price shock may reverse quickly, possible El Nino weather conditions, along with global food prices need to be watched closely, against the backdrop of skewed Southwest Monsoon.”

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In its August monetary policy review, the RBI kept the policy rates unchanged at 6.50 per cent but raised the forecast for CPI inflation for FY24 to 5.4 per cent from 5.1 per cent.