NEW DELHI (TIP): Rising vegetable prices and the impact of a weak rupee pushed inflation to a five-month high of 5.79% in July, posing yet another challenge for Asia’s third-largest economy battling to defend the rupee and boost growth. Official data released on Wednesday showed inflation, as measured by the wholesale price index, jumped to 5.79% in July from the previous month’s 4.86%. Easing wholesale price inflation had fuelled expectations of a moderation in tight monetary policy but the slide of the rupee against the dollar has dashed those hopes for now.
Food inflation shot up to double-digit in July as onion prices spurted nearly 144.94% year-on-year, while overall vegetable prices rose an annual 46.59%. Cereal prices rose an annual 17.66% in July sustaining the pressure but prices of pulses declined 7.39%. Some relief was visible in softening milk and fruits prices.
Retail inflation is hovering around double digits and FM P Chidambaram has acknowledged that consumer price inflation is a problem and supplies need to be raised to tackle the situation. Policymakers said they expect a good monsoon to moderate food prices.