NEW DELHI: India’s retail inflation for the month of July has gone up to 6.93 per cent, nearly a whole percentage point over the Reserve Bank of India’s (RBI) targetted upper limit of 6 per cent. The rise in prices was driven mainly on account of a sharp increase food rates. CPI-based retail inflation was 6.23 per cent in June.
According to government data released on Thursday, food inflation increased to 9.62 per cent in July compared to 8.72 per cent in June. Food items have an overall weightage of 45.85 per cent in the consumer price index. Vegetable prices in July rose a sharp 11.29 per cent from 4 per cent in the previous month, while inflation for fruits stood at 0.13 per cent compared to a 0.3 per cent rise in June.
Pulses prices rose by 15.92 per cent in July compared to 17.6 per cent in the previous month. Inflation in the transport and communication category rose to 9.95 per cent from 8.3 per cent. Experts predict that the trend will continue in August too. “The evolving trends for the ongoing month suggest that the CPI inflation may remain appreciably above 6 per cent in August, which would be the last inflation print available before the next scheduled MPC review, “ Aditi Nayar, economist with ICRA said.
Even the RBI has predicted that inflation would remain high in the September quarter, before cooling down in the second half of the financial year. In the recent Monetary Policy meet, the RBI kept the repo rate unchanged and maintained an accommodative stance.
“The MPC expects headline inflation to remain elevated in Q2:2020-21, but likely to ease in H2:2020-21, aided by favourable base effects,” RBI governor Shaktikanta Das had said after the MPC meeting on 6 August. Meanwhile, the National Statistical Office said data collection has improved after the gradual lifting of the lockdown. “Availability of price data has improved. NSO collected prices from 95% urban and 92% rural areas,” it said.