Retail inflation, a cause of worry
Subhasish Mitra (Wide Angle)
Retail inflation jumped to 7.43 per cent from a year ago in July, a 15-month high, breaching the Reserve Bank of India’s (RBI) tolerable limit of 6 cent on the back of runaway grocery and food prices, latest official data show.
It has become a cause of worry not only for consumers, but more so for the ruling NDA as the development comes ahead of Assembly elections in five states and the 2024 Lok Sabha polls, barely a few months away.
Mainly due to higher prices of certain food items, retail inflation for farm and rural workers inched up to 7.43 per cent and 7.26 per cent in July compared to 6.31 per cent and 6.16 per cent, respectively, in June this year.
A labour ministry statement said point-to-point rate of inflation based on the CPI-AL and CPI-RL stood at 7.43 per cent and 7.26 per cent in July 2023 compared to 6.31 per cent and 6.16 per cent, respectively, in June 2023 and 6.60 per cent and 6.82 per cent, respectively, during the corresponding month of (July 2022) the previous year.
Similarly, it stated that food inflation stood at 8.88 per cent and 8.63 per cent in July 2023 compared to 7.03 per cent and 6.70 per cent, respectively, in June 2023 and 5.38 per cent and 5.44 per cent during the corresponding month of the previous year.
The All-India Consumer Price Index Number for Agricultural Labourers (CPI-AL) and Rural Labourers (CPI-RL) for July 2023 increased by 19 points each to stand at 1,215 and 1,226 points, respectively.
The CPI-AL and CPI-RL were 1,196 and 1,207 points, respectively, in June 2023.
The major contribution towards the rise in general index of Agricultural Labourers and Rural Labourers came from food group to the extent of 18.23 and 18.28 points, respectively, mainly due to increase in prices of rice, wheat atta, pulses, milk, fish-fresh/dry, gur, chillies-green/dry, turmeric, garlic, ginger, onion, mixed spices, brinjal, tomato, gourd, etc.
The rise in index varied from state to state.
In the case of Agricultural Labourers, it recorded an increase of 1 to 29 points in 20 states. Tamil Nadu with 1,420 points topped the index table, whereas Himachal Pradesh with 932 points stood at the bottom.
In the case of Rural Labourers, it registered an increase of 9 to 28 points in 20 states. Tamil Nadu with 1,407 points topped the index table, whereas Himachal Pradesh with 993 points stood at the bottom.
Among states, the maximum increase in the Consumer Price Index Numbers for Agricultural Labourers was experienced by Tamil Nadu (29 points) and for Rural Labourers by Tamil Nadu and Kerala (28 points each), mainly due to a rise in the prices of pulses, fish fresh/dry, chillies-green/dry, ginger, onion, brinjal, tomato, gourd, etc.
Another culprit of inflation is oil prices. A few days back, crude oil 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.
The Government is already burning the midnight oil to tame oil prices.