Newsletter
After June’s 18-month high, India's retail inflation hit a 19-month high in July, rising 4.45%. In his latest policy outcome speech, RBI Governor Sanjay Malhotra had warned that headline inflation could rise over the next few months before cooling again.
What to blame: food continued to do most of the damage.
Food inflation surged to 5.52% from 5.32% in June. Higher food prices pushed overall inflation slightly above what economists had expected.
Other inflation numbers: the July data showed price increases across a wide range of categories.
July vs June
- Rural inflation rose to 4.84% from 4.74%.
- Urban inflation moved up more modestly to 3.96% from 3.93%.
- Housing inflation also edged higher, rising to 2.22% from 2.10%.
- Clothing and footwear inflation increased to 3.38% from 3.23%.
- Restaurant and accommodation services inflation saw a sharper rise to 7.72% from 6.91%.
Some good news:
- Health inflation eased to 1.34% from 1.42%,
- personal care, social production and miscellaneous goods inflation declined to 14.77% from 16.72%.
What experts said: apart from food, experts contributed July’s inflation rise to fuel, transport costs and precious metals, rather than a broad jump in consumer demand. Gold and silver prices are also keeping underlying inflation elevated, while higher crude prices and West Asia tensions could add more pressure.
But again a calm in geopolitical tensions could ease food prices which will eventually lead to inflation below the RBI’s expected peak.
