Retail inflation jumped to 7 percent in August as against 6.71 percent in July. This is the eighth straight month when the inflation number has been above the Reserve Bank of India’s (RBI’s) upper range of 6 percent. The latest numbers are likely to prompt the RBI to go for another rate hike.
The annual food price inflation is even higher at 7.62 percent. The surge was driven largely by fuel, clothing, and food and beverages. According to the government data, inflation in the food basket was 7.62 percent in August, up from 6.69 percent in July and 3.11 percent in August 2021.
The RBI has increased policy rates by 140 basis points since May this year. The report further stated that perhaps the most heartening development in recent times had been the easing of inflation in July by 30 basis points from June and an appreciable 60 basis points from the average of 7.3% for Q1:2022-23.
“This has validated our hypothesis that inflation peaked in April 2022. For the rest of the year, the RBI’s projections scent a steady easing of the momentum of price changes,” the report said, adding that the inflation will fall from 7 to 5 percent in Q1 next financial year – within the tolerance band.