Retail inflation roars to 7.44% as food costs bite
NEW DELHI : Consumer Price Index (CPI)-based inflation shot past estimates to hit a 15-month high of 7.44% in July as food and vegetable prices surged, breaching the Reserve Bank of India’s (RBI) inflation target range for the first time since February. A Mint poll of 19 economists had estimated a six-month high retail inflation of 6.50% in July, sharply up from June’s 4.81%, on account of a surge in vegetable prices.
Respondents in the poll had made estimates in the range of 5.5-7.5%, with all but two expecting inflation to cross the upper limit of RBI’s 2-6% target band The revised retail inflation for June stood at 4.87%, according to the latest data. Food inflation measured by the Consumer Food Price Index (CFPI), which accounts for nearly half of the overall consumer price basket, quickened to 11.51% in July from 4.55% (revised) in the preceding month, registering its highest level since October 2020, according to data released by the ministry of statistics and programme implementation (MoSPI).
This was the primary reason for the jump in July retail inflation, according to Madan Sabnavis, chief economist at Bank of Baroda. “Cereals, pulses, vegetables, spices and milk all had high inflation, with vegetables topping at 37.3%.
True, this can be temporary, but it takes time for prices to come down to temper these rates," Sabnavis added. Inflation in these categories continued in double digits in July.
Core inflation, which excludes the volatile food and energy categories, cooled slightly to 5.1%, remaining below the headline inflation, said Aditi Nayar, chief economist at Icra Ltd. A lot of the gains from falling interest rates after RBI’s rate hike pause in April could be undone by what is clearly a transitory food
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