Food inflation hovers at 9.94pc in August
Food inflation hovered at 9.94 per cent in August, although slightly down from 11.51 per cent in July, according to official data. Cereal prices remained in double digits and rose 11.6% in August as compared with 13% in July. Milk and milk products inflation came in at 7.7% as compared to a rise of 8.34% in the previous month.
Team RuralVoice
Food inflation hovered at 9.94 per cent in August, although slightly down from 11.51 per cent in July, according to official data.
Cereal prices remained in double digits and rose 11.6% in August as compared with 13% in July. Milk and milk products inflation came in at 7.7% as compared to a rise of 8.34% in the previous month.
Consumer price inflation exceeded the central bank’s target range for the second straight month, driven by a sharp spike in tomato and vegetable prices.
Vegetable prices, still high, rose 26.1% against a staggering 37.34% rise in July, while prices of oils and fats declined by 15.3% after dropping by 16.8% in the previous month.
Battling high prices, the government has regulated trade in most food items to cool consumer inflation. India has banned rice and wheat shipments abroad, levied a 40% duty on onion export and allowed duty-free imports of pulses.
Food prices have been a key concern for policymakers since last year as erratic weather conditions have hurt the output of vegetables, milk and cereals.
Analysts expect inflation to cool in September when new harvests will hit the markets.
Retail inflation, however, declined to 6.83 per cent in August compared to July, mainly due to easing food prices.
The Consumer Price Index (CPI) based inflation was at 7.44 per cent in July and at 7 per cent in August 2022, as per the data released by the National Statistical Office (NSO) on Tuesday.
The Reserve Bank of India (RBI) has projected the CPI inflation at 5.4 per cent for 2023-24.
Meanwhile, India's industrial production increased by 5.7 per cent in July, according to the official data released on Tuesday.
Factory output measured in terms of the Index of Industrial Production (IIP) grew by 2.2 per cent in July 2022.
Commenting on the latest inflation numbers Rajani Sinha, Chief Economist, CareEdge Ratings said, "The moderation in CPI inflation to 6.8% in August is comforting. The critical aspect to note is that core inflation has moderated to 4.9%. While overall food inflation has moderated, the worrying aspect is that the sequential upward momentum has continued for some food items like cereals, pulses and milk. There is risk of further upward pressure on food inflation given the skewed rainfall and low reservoir levels. The recent spike in global crude oil prices is also concerning. However, a comforting factor is that the continued deflation in WPI will have a lagged impact on CPI inflation going forward. While RBI will remain cautious, we expect an extended pause in policy rates in 2023."
