Rise in food price led to 7% increase in retail inflation

India’s retail inflation touched 7% in August, up from 6.71% in July, fuelled by a 7.62% pick-up in food prices. The rise was largely driven by a broad-based rise across the food segment, with a higher inflation in cereals, pulses, milk, fruits, veggies and prepared meals and snacks.

The high inflation will also affect household budgets, particularly lower income segments as food and related items make up a higher share of their consumption basket. Consumer non-durables’ production dropped 2% in July from a 2.96% leap in June.

Price rise in cereals rose further from 6.9% in July to 9.6% in August, while vegetables inflation, which had eased to a still-high level of 10.9% in July, recorded a 13.23% uptick in August. Domestic causes, especially the uneven monsoon and its adverse impact on food prices erupted the inflation.

Capital goods production recorded the highest growth among use-based categories at 5.8%, but consecutively contracted in July by 6.7%. Rural inflation saw a sharper rise than urban inflation in August, rising to 7.15%. Urban consumers’ inflation rate ascended from 6.49% in July to 6.72%.

Ten of 22 major states recorded inflation over 7%. West Bengal recorded the highest price rise at 8.94% in August. Gujarat’s inflation rate also shot past the 8% mark at 8.22% in August from 7.85% in July, while Telangana’s price rise dropped marginally from 8.58% in July to 8.11% in August.

Maharashtra recorded higher inflation than July at 7.99% in August, while Madhya Pradesh (7.83%), Assam (7.73%), Haryana (7.71%) and Uttar Pradesh at 7.62%, were some of the other states seeing the highest price rise during the month.