Retail inflation reaches 7.44% in July, highest in 15 months

New Delhi: In July, inflation reached an all-time high due to rising vegetable and other food items prices. According to official figures released on Monday, retail inflation in July climbed to 7.44% from a year ago, exceeding the Reserve Bank of India's tolerance limit of 4% due to rising grocery and food costs. The Consumer Price Index reported 4.87 percent inflation in June. It was 6.71 percent in July of the previous year. Inflation peaked at 7.79 percent in April 2022.

According to the National Statistical Office (NSO), food inflation was 11.51 percent in July, up from 4.55 percent in June and 6.69 percent in July of last year. The yearly inflation rate for vegetables was 37.43 percent, while cereals and their products grew by 13 percent.

The latest retail inflation data increased the Reserve Bank's concern. In fact, after four months of being under control, retail inflation has surpassed the Reserve Bank's 2-6 percent target. The Reserve Bank has held the repo rate constant for three consecutive periods in order to control inflation.If inflation exceeds the target, the Reserve Bank may be forced to hike the repo rate.

Meanwhile, wholesale inflation remained zero in July for the fourth consecutive month. In July, wholesale price inflation (WPI) was minus 1.36 percent. In June, wholesale inflation was minus 4.12 percent due to a 62.12 percent increase in vegetable costs. In July of the previous year, it was at 14.07 percent. According to government figures, food inflation was 14.25 percent in July, up from 1.32 percent in June.

The Ministry of Commerce and Industry said on Monday, "The decline in inflation rate in July 2023 is mainly due to reduction in prices of mineral oils, basic metals, chemicals and chemical products, textiles and food products."