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The effect of rising vegetable prices is finally seen making its impact in the official . The Ministry of Statistics and Programme Implementation released the retail inflation figure for July 2023, which came in at 186.3, compared to 173.4 in July 2022, representing a sharp YoY spike of 7.44%.
Higher inflation was estimated by looking at soaring vegetable prices, such as of tomatoes which became out of reach for many households, however, such a noticeable CPI jump even outpaced the forecast of 6.4%. Just a couple of months back, the CPI rise was recorded at a nominal 4.25% in May 2023. This was quite close to the RBIs target of 4%.
Image Source: MoSPI
But two months later, a rise of 7.44% which has breached the central bank’s upper tolerance limit of 6% is concerning. While dwelling into the individual constituents of the CPI, it was clear that vegetable prices were the main culprit with a price rise of 37.3%. Spices also witnessed a sharp surge of 20.6% in prices which also contributed to food inflation.
The food and beverages category holds a weightage of 45.86% in the CPI and due to a steep rise in food prices, it contributed the highest inflationary pressure on the index, at 10.57%.
Another culprit of inflation is oil prices. A few days back, prices rallied to the highest level of 2023, to around $84.8 per barrel and India being a net importer of crude oil gets vastly affected by changes of such magnitude. The fuel and light category which holds a weightage of 6.84% witnessed a YoY price rise of 3.67%. If oil prices remain stable at these higher levels, we might see an even steeper effect from it in the August 2023 inflation figure.
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