Inflation surges beyond RBI’s tolerance band

  • Retail inflation surged to 7.44% in July on an annual basis as against 4.8% in June. This is the first time in four months that inflation has exceeded the central bank’s target.
  • The inflation levels for food & beverage surged to 10.57% from 4.63%. For cereals, the inflation rate increased to 13.04% from 12.71% in June.
  • Food prices, which account for nearly half of the inflation basket, have soared in the last two months largely due to an erratic monsoon throughout the country.
  • In particular. tomato prices at wholesale markets saw prices go up by more than 1,400 per cent in the past three months.
  • The Reserve Bank of India had raised its inflation forecast in its Aug 23 meeting to 5.4%, up 30bps due to risks in the food inflation outlook.

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