India’s CPI Inflation surges to 7.44% for Jul 2023

India’s CPI inflation came in at 7.44% for Jul-23, the highest reading since April-22 and much higher than Jun-23 reading of 4.87%.


The leap in food and beverage inflation to 10.57% in July from a comparatively moderate 4.6% the previous month is particularly remarkable. For the first time since February of this year, overall consumer price inflation has risen above the Reserve Bank of India’s (RBI) target range of 4% (+/- 2%).

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Cereal prices increased by 13% in July, following a 12.7% increase in June. Meat and fish inflation increased to 2.25% from 1.41%, while inflation in egg prices fell somewhat from 7.03% in the previous month to 3.82%. Milk and milk products witnessed a little decline, with its inflation falling to 8.34% from 8.6% previously. The most startling change, however, was noted in vegetable costs, which increased by 37.34% after previously declining by 0.93%.

Among these fluctuations, the impact of tomato prices on overall inflation trajectory stands out. The spike in vegetable prices, primarily propelled by tomatoes, has exerted significant upside pressures on the near-term headline inflation. A staggering 234% month-on-month increase in July tomato price was witnessed. However, experts anticipate this phenomenon to be short-lived as fresh market arrivals are expected to rectify the situation.

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Takeaway: India’s CPI inflation has surged to 7.44%, the highest since April 2022. This surge, particularly evident in the Food and Beverages category with a 10.57% increase, has pushed the overall consumer price inflation beyond the Reserve Bank of India’s target range for the first time since February. Notably, vegetable prices, notably tomatoes, have played a pivotal role in this rise, spiking by 37.34%. Despite these challenges, experts remain cautiously optimistic, expecting the inflationary pressures to ease with the normalization of vegetable prices and market adjustments.

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