July retail inflation is expected to exceed the maximum limit of six percent, the government will release the figures on this day

Retail inflation is expected to exceed 6 percent in July due to higher prices of vegetables and cereals, especially rice and wheat. RBI capped retail inflation at 6 percent. In June this year, the retail inflation rate was 4.81 percent and for the last four months, the retail inflation rate has been below 6 percent. 

Aug 9, 2023 - 21:47
 0
July retail inflation is expected to exceed the maximum limit of six percent, the government will release the figures on this day

Due to the increase in the prices of vegetables, pulses, and cereals, especially rice and wheat, the July retail inflation rate is expected to be more than six percent. The RBI has fixed a ceiling of six percent for the retail inflation rate. In June this year, the retail inflation rate was 4.81 percent and for the last four months, the retail inflation rate has been running below six percent.

On August 14, the retail inflation rate data for July will be released by the government. Economic experts say that mainly the increase in the prices of food items seems to be affecting the retail inflation rate. Food articles have a weightage of 47.25 percent in measuring the retail inflation rate. Out of these 47.25 percent, 7.46 percent share is of vegetables, which includes different types of vegetables including potato-onion and tomato.

The share of all types of cereals including wheat-rice is 12.35 percent and the share of pulses is 2.95 percent. In such a situation, the retail inflation rate will definitely be affected by the increase in the prices of these items. According to Soumya Kanti Ghosh, Group Chief Economic Advisor, SBI, the retail inflation for the month of July could reach 6.7 percent.

But in the coming time, due to the reduction in the retail price of vegetables, the inflation rate will also come down. The retail inflation rate for the financial year 2023-24 maybe 5.8 percent. Due to El Nino, there is a possibility of a decline in the production of palm oil in Indonesia and Malaysia. This may increase the price of India's palm oil imports. Due to the war with Russia, the import of sunflower oil from Ukraine is also getting affected. Due to these reasons, the price of edible oil is also expected to increase.

The retail price of wheat has reached its highest level in six months. According to the Consumer Affairs Department, the retail price of rice has also increased by Rs 3 to Rs 8 per kg in different parts of the country in July this year as compared to last year.

Given these factors, Sakshi Gupta, Chief Economist, HDFC Bank, estimates that July's retail inflation may cross the upper limit of RBI and reach 6.6 percent. Because the price of tomatoes increased by more than 200 percent in July as compared to June. The prices of pulses and cereals have also increased.

Muskan Kumawat Journalist & Writer