Crisis worsens: Inflation shoots up to 5.79%

Rising for the second consecutive month, inflation shot up to 5.79 per cent in July, driven

largely by double digit rise in prices of food articles, mainly vegetables, including onion.    

Inflation based on the Wholesale Price Index had stood at 4.86 per cent in June.

In July, 2012, it was 7.52 per cent.

As per official data released on Wednesday, WPI inflation in the food articles category rose to double digits at 11.91 per cent, driven mainly by price rise in onion, cereals and rice.

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The rate of price rise in food articles, which has a 14.34 per cent share in the WPI basket, was at 9.74 per cent in June.

The inflation in the food articles category rose for the third straight month.

Inflation in onion shot up by 145 per cent in July on an annual basis.

It has risen by 114 per cent in the previous month as against the same period last year.

Vegetables’ prices too went up by 46.59 per cent during the month, from 16.47 per cent in June.

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Inflation in the manufactured items category showed a marginal rise to 2.81 per cent in July, from 2.75 per cent in June.

The non-food articles category, which include fibre, oil seeds and minerals, saw a decline in inflation to 5.51 per cent, from 7.57 per cent in June.

Inflation in rice stood at 21.15 per cent in July, against 19.11 per cent in the previous month.

Also cereals prices rose to 17.66 per cent from 17.18 per cent in June.

Inflation for May was revised downwards to 4.58 per cent from 4.70 per cent as per provisional estimates.

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This is the first time in four months that the WPI inflation rose above the 5 per cent level. It was 5.65 per cent in March and since then remained at sub-5 per cent level.

The Reserve Bank expects the March-end inflation to be at 5 per cent.

In its preview of first quarter monetary policy last month, the Reserve Bank had said the stronger than expected monsoon has not softened food inflation as much as it should

have and in particular, vegetable prices have been impacted by weather-driven supply disruptions.

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Finance Minister P Chidambaram had earlier said there was a need to improve the supply side constraints to bring down retail inflation.

The data showed inflation in egg, meat and fish at 10.94 per cent during July, lower than 12.23 per cent in the previous month.

Potato, however, saw a decline in the rate of price rise to (-) 6.45 per cent during the period.

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Inflation in pulses too declined sharply to (-)7.39 per cent during July, from 1.59 per cent in June.

For the fuel and power category, inflation was higher at 11.31 per cent in July as compared to 7.12 per cent in the previous month.

Data released earlier this week showed retail inflation falling marginally to 9.64 per cent in July, from 9.87 per cent in the previous month.