Retail Inflation Soars To 7% In August

Retail inflation in India soared to 7% in August as against the 6.71% reported in July as a result of rising food prices, according to government data released on Monday. The consumer price index based inflation remains above the Reserve Bank's comfort zone of 6% for eighth consecutive month.

According to the data, inflation in food basket was 7.62 per cent in August, up from 6.69 per cent in July and 3.11 per cent in August 2021.

Earlier, as per a Reuters poll of nearly 45 economists, inflation was estimated to rise to an annual 6.90% in August as compared to 6.71% in the previous month despite Indian government curbing wheat flour exports.

Vivek Rathi, Director-Research Knight Frank India expressed his opinion on retail inflation data released today and said, "Inflation levels in the economy remain elevated despite a considerable reduction in crude oil price from its recent highs. Rise in food prices, domestic fuel price level and pressure on the Indian currency continue to pose near term threat on inflation trajectory. These will also guide the upcoming monetary policy action, which has so far already witnessed three policy rate hikes and liquidity tightening measures over last 5 months. However, the strong sentiment on both the business and consumer fronts highlights the economic resilience, which domestic and global business participants are expected to take note of for their India plans."

Raghvendra Nath, Managing Director, Ladderup Wealth Management Pvt. Ltd said, "For the month of August, the consumer price index (CPI) surged to 7% as against 6.71% in July. Though in the past three months retail inflation was on a downtrend, this month data has marginally increased majorly due to increase in food prices. Nearly half of the CPI basket is accounted by food inflation which includes daily essentials like wheat, rice and pulses which went skyrocket due to various factors like record heatwaves, erratic monsoon pattern etc. As against 6.75% in July, food inflation soared 7.62% in August 2022, according to the data released by the National Statistical Office."

In order to curb the inflation, there are high chances that Central bank might have to aggressively increase the interest rates, added Raghvendra Nath.

Data released by the National Statistical Office showed, India's industrial growth, measured by the Index of Industrial Production (IIP), recorded a growth of 2.4 percent in July, as against 12.3 percent in June, said Raghvendra Nath.