Rajasthan, Jharkhand, Haryana, and UP among nine states with retail inflation above 8% in July

Seven states including Karnataka, Gujarat, Himachal, Madhya Pradesh, Maharashtra, Chhattisgarh, and Kerala witnessed inflation in the range of six to eight percent.

West Bengal witnessed retail inflation at a tad below six percent i.e. 5.96 percent. Only two states, Assam and Delhi, clocked retail inflation below four percent levels at 3.91 percent and 3.72 percent, respectively.

Rajasthan and Jharkhand also clocked the highest rural and urban inflation rates among the 22 major states. While the former recorded double digit urban inflation of 10.4 percent the latter saw rural inflation at 9.9 percent. Consequently , both states have suffered the highest inflation rates.

However, Uttarakhand’s urban inflation rate rose to 10.46 percent, beating Rajasthan’s double digit number although it saw lower rural inflation which kept the overall price rise below nine percent. Odisha is next in terms of high urban inflation with a 9.9 percent rate.

Several states witnessed an uptick in rural inflation as well with Jharkhand topping the list, closely followed by Telangana with 9.7 percent, while Haryana and Tamil Nadu saw rural inflation surge to 9.4 percent and Rajasthan to 9.3 percent.

With food price inflation having more than doubled to 11.5 percent in July from 4.5 percent in June, consumer budgets across major states are feeling the pinch. Be it wheat, rice, vegetables or spices - major items in the food and beverages component of the CPI - almost all of these prices have gone up .

On a national level, vegetable prices are up over 37 percent while spices are up over 21 percent just between June & July. For urban India the rise is sharper with vegetable prices up over 41 percent.

The food and beverage group, comprising these items almost has a 46 percent share in the CPI basket at an all India level while for rural India the share of F&B in the CPI is higher at 54 percent.

Clearly, galloping food inflation, primarily led by vegetables and spices has queered the pitch for India’s inflation management, leaving the Centre with extremely limited tools to help cool prices.

However, economists are still optimistic. According to Ashok Gulati , Chair Professor for Agriculture at ICRIER, “ We shouldn’t be reading too much in the July CPI data. Vegetable prices going up is a very transient phenomenon. It won’t be a surprise if next month tomato prices for instance, come down to Rs 30/40 in Delhi next month. More arrivals have started from the second week of August and prices are already coming down. This is a transient phenomenon”