India's retail inflation surges to 15-month high of 7.44% in July, breaches RBI's tolerance level

The inflation in the food basket was 11.51 percent in July compared to 4.55 percent in June and 6.69 percent in July 2022, as per the government data.

The retail inflation in vegetables year-on-year was 37.43 percent while the rate of price rise in 'cereals and products' was 13 percent, showed the data released by the National Statistical Office (NSO).

Vivek Rathi, director of research at Knight Frank India, said, "The rise in July inflation print to 7.4 percent is primarily driven by price rise in items in the food category, across the basket. Categories like vegetables and cereals have seen inflation rise to 37.3 percent and 13 percent respectively."

"While this seasonal impact on food prices is expected to withdraw in the coming months, it will create some discomfort, particularly when US Fed too has increased rates recently and hardened its stance on inflation targeting thereby influencing exchange rate trajectory across the world," Rathi said.

NSO collects price data from selected 1,114 urban markets and 1,181 villages across the country. During March 2023, it collected prices from 100 percent of villages and 98.5 percent of urban markets.