Retail inflation surges to 7.44 per cent on high food, vegetable prices

The retail inflation in India has surged to 7.44 per cent, a nine-month high, in July, marking an sizable increase from 4.87 per cent in June.

According to the experts the surge in the inflation was caused mainly by the high prices of the vegetables and foods.

The experts had predicted that the consumer price index-based inflation would be above the Reserve Bank of India's upper tolerance limit of 6 per cent. However, the actual figure is higher than what most experts had estimated. With this, the retail inflation breached the RBI's 2-6 per cent threshold after four months.

The surge in retail inflation has come in the wake of a sharp rise in vegetable prices over the past few months, along with an equally sharp rise in the prices of cereals such as rice and wheat.

It is worth noting that food prices, which account for nearly half of the inflation basket, have surged sharply over the past two months due to erratic weather conditions throughout the country. This pushed prices of some key kitchen staples like tomatoes sharply, leading to a drastic increase in retail inflation.

Meanwhile, in July, rural inflation increased to 7.63 per cent, up from 4.78 per cent in the previous year. Urban inflation also rose to 7.20 per cent from 4.96 per cent the previous month.

The sharp rise in retail inflation could make the RBI's task more difficult, just days after the central bank's Monetary Policy Committee held rates steady. The central bank also estimated retail inflation to remain high in August, suggesting that prices pressure will continue this month as well.

Prime Minister Narendra Modi has also called for taking steps to keep the inflation under check. The BJP could be apprehending that the opposition might make it an issue in the forthcoming assembly polls in five states.