India's retail inflation reached 4.8% in August, a rise from 4.4% in July, primarily due to higher food prices. Simultaneously, wholesale inflation increased to 9.9% from 9.7%. This article delves into the factors contributing to these increases.
According to government data released on Monday, India's retail inflation rose significantly to 4.8% in August, a notable increase from 4.4% in July. The rise was primarily due to an escalation in food prices.
The National Statistics Office reported that food inflation increased to 5.9% in August, up from 5.5% in July. This surge was particularly noticeable in the prices of staples such as ginger, onion, and garlic. Inflation in food-serving services also saw a substantial increase, rising to 8.4% from 7.7%. Additionally, transport inflation rose to 4.6% from 4.4%.
The rise in wholesale inflation has been observed since the beginning of the financial year due to various factors. One significant factor is the ongoing war in West Asia, which resulted in a blockade of the Strait of Hormuz. This disruption impacts India's oil and gas imports, with 88% of crude oil and about half of natural gas being imported through this strait.
The consequences of this disruption have also affected food prices, as evidenced by the wholesale food inflation rising to 7% in August from 6.6% in July. Inflation in primary food articles increased to 5.6%, while inflation in manufactured food products rose to 9.6%.
Overall, wholesale inflation has remained close to double digits for four consecutive months. It rose from 3.9% in March to 8.3% in April and further to 9.8% in May. The provisional estimate of June inflation was revised up to 9.9%, and it eased slightly to 9.7% in July.
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