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CareEdge Research Report
India's retail inflation moderated to 6.8% YoY in August from a high of 7.4% in July. The sharp surge in food inflation in July, owing to skyrocketing prices of vegetables, witnessed some moderation last month owing to government's active intervention.
However, the contribution of food and beverages to the overall inflation was at a high of 62% in August.
On a positive note, core inflation moderated to 4.9% YoY in August (versus 5.1% in July), with easing of inflation in segments such as housing, personal care & effects and recreation.
Food inflation eased from double-digit growth of 10.6% YoY in July, to 9.2% YoY in August. The moderation was on account of softening of vegetables inflation, which on a sequential basis registered contraction.
Inflation in key items such as tomatoes, potato and onions eased on a sequential basis in August.
While inflation in tomato prices contracted 22%, that of potatoes and onions eased to 2.3% (versus 10.9% prior) and 12.3% (versus18.9% prior) , respectively.
Tomato prices eased after the sharp surge seen in July, owing to arrivals of fresh crop and government intervention. There was a rise in price of onions in in August and that can be attributed to weak domestic supply of the item following high rainfall in key producing states such as Maharashtra and Karnataka in July.
However, the government has intervened by offloading onion buffer stocks in various wholesale markets and the government has also imposed a 40% duty on the export of onions to improve the availability of the item in domestic markets.
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