India’s retail inflation increased from 1.55% to 2.07% in August to 2.07% in August. According to government data, this increase has been due to reduced effects of high base effects. The base effect, which had maintained inflation in the last few months at the minimum level of many years, weakened in August. Along with this, the prices of food items increased, which is about half of the basket of the Consumer Price Index (CPI).
A survey of 40 economists of Reuters estimated that retail inflation would increase to 2.10% in August. This is the seventh consecutive month when inflation remains below the 4% medium -term target of the Reserve Bank of India (RBI). Food inflation, which is about half of the CPI basket, increased from July -1.76% to -0.69% in August.
Why inflation increased?
The increase in prices of vegetables, meat and fish, oil, eggs, and personal care was mainly contributed to the rise in inflation. It is clear that when the prices of food and drink increase, then the budget of families is directly affected. The cost of eating and drinking increases due to expensive everyday essential items like vegetables, meat, oil, and eggs.
The difference of inflation in rural and urban areas
Inflation in rural areas was 1.69% in August, which has increased by 1.18% in July. At the same time, inflation in urban areas reached 2.47%, which is more than 2.10% of July. Talking about food inflation, it was 0.70% in rural areas and -0.58% in cities.
In August, the housing inflation came down to 3.09%, while education inflation remained at 3.60% and health inflation at 4.40%. At the same time, the expenses of transport and communication have also decreased. The fuel and light inflation rate also came down to 2.43%.