Even as retail inflation as measured by the consumer price index (CPI) fell to a 59-month low in July this year, food price pressures continued with items including vegetables, cereals, and pulses registering high inflation.
As per official data released on Monday, retail inflation eased to 3.54% in July this year as against 7.44% in July 2023 and 5.08% in June 2024. Consumer food price inflation, however, remained closer to the 6% mark at 5.42% in July as against 11.51% a year ago and 9.36% in June 2024.
Meanwhile, inflation in the food and beverages basket in July also remained higher than the headline inflation rate at 5.06% although marginally lower than 8.36% in June. While pulses inflation in July was at 14.77%, inflation in cereals was at 8.14% in the month and in vegetables was at 6.83%. Inflation in eggs also rose to 6.76% in July while in meat and fish, it was at 5.97%.
Analysts believe that the lower inflation has been due to the statistical impact of a higher base and price pressures will continue until the new crop comes in.
Madan Sabnavis, chief economist at Bank of Baroda noted that the major pain points remain in the cereals and pulses basket. “While inflation numbers may come down due to this effect, the new crop will enter only post-September which will determine the future course of price movements,” he said. While vegetable inflation was lower, he said that these prices too should cool down post-monsoon as the rains are not favourable for vegetable crops.
Aditi Nayar, Chief Economist & Head of Research and Outreach ICRA noted that food and beverages inflation eased to a 13-month low in July 2024 after printing above the 7% mark in each of the last eight months. “While eight of the 12 sub-segments in this group witnessed lower year-on-year inflation in July 2024 vis-à-vis June 2024, the chief driver of the downtrend was vegetable inflation, which declined quite sharply to 6.8% from 29.3% in the previous month, led by the favorable base, she said, while noting that in month on month terms, vegetable prices shot up by 14.1% in July 2024, after having risen at a similar pace in June 2024.