Retail Inflation Rises to 3.65% in August, Vegetable and Pulse Prices Surge

Retail inflation in August increased to 3.65%. Vegetables and pulses experienced double-digit price rises, while overall food inflation was at 5.66%. The inflation rate remained below the Reserve Bank's median target of 4% for the second consecutive month, despite predictions of future increases.

Retail inflation in August inched up to 3.65 percent, according to official data released on Thursday, with vegetables and pulses witnessing double-digit price rises.

Based on the Consumer Price Index (CPI), inflation remained below the Reserve Bank's median target of 4 percent for the second month in a row. This comes after hitting a five-year low of 3.6 percent in July. The headline inflation stood at 6.83 percent in August 2023.

The National Statistical Office (NSO) highlighted that the year-on-year inflation rate for August 2024 was the second lowest in the last five years. Inflation in vegetables was recorded at 10.71 percent, and pulses and products surged to 13.6 percent. Conversely, spices saw a negative inflation of -4.4 percent, and oils and fats were at -0.86 percent.

The overall inflation within the food basket edged up to 5.66 percent from 5.42 percent the previous month, marking it the second-lowest since June 2023. At the item level, tomatoes showed the lowest year-on-year inflation at -47.91 percent and a month-on-month change in index of -28.8 percent.

Inflation in the 'fuel and light' category also went negative, at -5.31 percent. Urban centers recorded retail inflation at 3.14 percent, while rural areas stood at 4.16 percent. Bihar experienced the highest inflation at 6.62 percent, and Telangana the lowest at 2.02 percent.

The government has tasked the Reserve Bank of India (RBI) to keep inflation at 4 percent with a margin of 2 percent on either side. Inflation has been below 6 percent since September 2023.

ICRA's chief economist Aditi Nayar commented on the data, predicting a sharp pickup in CPI inflation to about 4.8 percent in September 2024, ranging between 4.4 and 4.7 percent in H2 FY2025. Despite a slight easing to 3.5 percent in August 2024, she expects core CPI inflation to rise through the fiscal year.

NSO collected price data from 1,114 urban markets and 1,181 villages across all states and UTs in August 2024, achieving almost complete coverage.

(With inputs from agencies.)