- Wednesday, October 16, 2024
India's inflation rate has climbed for the second consecutive month, surpassing the central bank's target range. The increase can primarily be attributed to a surge in food prices.
According to preliminary government data published on Monday, consumer prices in July rose by 7.44% compared to the same period in the previous year. This marked an acceleration from the upwardly revised 4.87% increase recorded in June. The actual reading exceeded the consensus forecast of economists polled by FactSet, who had predicted a rate of 6.9%. It is worth noting that this rise follows a sharp drop in May, when the inflation rate hit a 25-month low of 4.31%.
This recent figure also surpasses the Reserve Bank of India's target range of 2% to 6%, making it the first time since February that the bank missed its target.
The consumer price index was heavily influenced by food and beverage prices, which experienced a significant increase of 10.57% in July compared to June's reported 4.63% rise.
Given these developments, policymakers at the central bank may consider raising interest rates to combat inflation. It is important to note that the benchmark rate has remained at 6.5% after the most recent meeting.
However, there is some relief in terms of inflation rates for clothing and footwear (5.64% in July) as well as for fuel and light (3.67% in July). Both these sectors experienced a cooling effect compared to the measurements taken in June.
In conclusion, India's inflation is on an upward trajectory, with food prices being the primary driver. It remains to be seen how policymakers will address this issue moving forward.
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