Retail Inflation In August: India's retail inflation rose slightly to 2.07% in August, from an eight-year low of 1.55% in July. According to government data, this increase is mainly due to the weakening of the base effect and the rise in food prices. Till July, the base effect had kept inflation historically low, but in August the trend changed due to the reduction in its effect.Experts' estimates were also pointing towards this. 40 economists surveyed by Reuters had predicted an inflation rate of 2.10% for August. This is the seventh consecutive month when retail inflation has remained below the Reserve Bank of India's (RBI) medium-term target of 4%.
Why did inflation increase?The main reason for inflation was the increase in the prices of vegetables, meat-fish, oil, eggs and personal care items. These everyday needs directly affect household expenses. It is natural for the pressure on the budget of families to increase due to the increase in the prices of items like vegetables and edible oil.
Rural vs Urban ImpactInflation in rural areas rose from 1.18% in July to 1.69% in August, while in urban areas it rose from 2.10% to 2.47%. Food inflation was recorded at -0.70% in rural areas and -0.58% in urban areas.
Situation in other sectors- Housing inflation: down to 3.09%
- Education inflation: 3.60%
- Health inflation: 4.40%
- Fuel and light: down to 2.43%
Transport and communication: Expenses also reducedOverall, August inflation indicates that even though it remains well below RBI's target, volatility in food prices can affect both consumer wallets and monetary policy in the coming months.