West Bengal Logs Highest Retail Inflation, Delhi Lowest Among States

The inflation recorded in August is above the Reserve Bank of India's comfort level of 6 per cent for the eighth month in a row

Erratic monsoon patterns across the country suggest more crop damages, keeping food prices elevated in the coming months.

Source : Getty

India’s retail inflation, as measured by the consumer price index (CPI), rose to 7 per cent in August, compared to 6.71 per cent in the last month. The inflation snapped a three-month downward trend in August by inching marginally to 7 per cent, mainly because of higher food prices, according to the government data released on Monday.

The inflation recorded in August is above the Reserve Bank of India's (RBI's) comfort level of 6 per cent for the eighth month in a row.

According to the data, inflation in food basket was 7.62 per cent in August, up from 6.69 per cent in July and 3.11 per cent in August 2021. Erratic monsoon patterns across the country suggest more crop damages, keeping food prices elevated in the coming months, with negative seasonality kicking in for September-November and weighing on price pressures. This may add pressure on the RBI to hike interest rates more aggressively in coming months.

To tame the soaring inflation, the central bank raised its key policy repo rate by 50 basis points (bps) in August to 5.40 per cent, taking the total rise since May to 140 bps. Analysts have pointed out that the RBI will hike repo rate at least by 50 bps in its next policy outcome. 

Here's a snapshot of the inflation chart:

CPI - Inflation (August 2022)

Inflation in August 2022 – 7.00% 

State-wise data:

• West Bengal clocks highest inflation – 8.94%
• Delhi logs lowest inflation – 4.16%

Why Bad:

• Inflation in August increased after reducing for three consecutive month
• Inflation still more than same month, last year (August 2021 – 5.30%)
• Rural inflation is more than Urban Inflation
• Still above the RBI's acceptable limit of 6%
• After 7 months of continuous rise, inflation for 1^st time came down in May 2022

CPI Inflation:

• April 2022 – 7.79 %
• May 2022 – 7.04 %
• June 2022 – 7.01 %
• July 2022 – 6.71 %
• August 2022 – 7.00 %

Year-on-Year Inflation (August 2021 and August 2022)

• August 2022– 7.00 %
• August 2021– 5.30 %

 Reason – High prices of Cereals, Vegetables, Spices, Fuel and Light, etc

Cause of concern:

• Spices – 14.90%
• Vegetables – 13.23%
• Footwear – 11.85%
• Fuel and Light – 10.78%
• Clothing – 9.58%
• Cereals and products – 9.57%
• Household Goods and Services – 7.53%

Urban Inflation v/s Rural Inflation

	Rural inflation	Urban inflation	Conclusion
January 2022	6.12%	5.91%	Rural inflation more than urban
February 2022	6.38%	5.75%	Rural inflation more than urban
March 2022	7.66%	6.12%	Rural inflation more than urban
April 2022	8.38%	7.09%	Rural inflation more than urban
May 2022	7.08%	7.08%	Urban and rural inflation same
June 2022	7.09%	6.86%	Rural inflation more than urban
July 2022	6.80%	6.49%	Rural inflation more than urban
August 2022	7.15%	6.72%	Rural inflation more than urban