INDIA’S RETAIL INFLATION RISES TO 7.44 PCT IN JULY

Mon 14 August 2023:

The National Statistical Office (NSO) said on Monday that India’s consumer-based price index, or retail inflation, increased to 7.44 percent year on year in July from 4.87 percent in June, The Indian Express reported.

The increase in inflation was mostly caused by a substantial increase in vegetable costs, particularly tomatoes, in the previous month.

With the consumer price index climbing to 7.44 percent in July, retail inflation surpassed the Reserve Bank of India’s 2-6 percent tolerance level for the first time in five months.

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 consumer food price index (CFPI) surged to 11.51 per cent from 4.49 per cent in June. India’s rural inflation in July rose to 7.63 per cent YoY from 4.78 per cent in July, while urban inflation surged to 7.20 per cent from 4.96 per cent a month ago.

This comes after RBI in its August monetary policy review 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.

The central bank said the rise in inflation would be due to soaring vegetable prices, which are expected to rise further in the next couple of months.

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.”

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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