In the previous month, CPI numbers stood at 6.71%. July was the 3rd month in a row when retail inflation numbers had cooled from its 8-year high of 7.79% in April.
Food inflation, which accounts for nearly half the consumer price index (CPI) basket, soared as prices of essential crops like wheat, rice and pulses were driven higher.
Retail inflation is ruling above the Reserve Bank’s comfort level of 6% since January. This is the 8th month in a row when inflation figures remained above central bank’s tolerance band of 2-6%.
The Reserve Bank of India (RBI), which has been tasked by the government to keep inflation within 2-4% range, has hiked the key policy rate by 140 basis points since May with an aim to check the rate of price rise.
The RBI’s own projections showed inflation staying above the 6% top end of its target range until early 2023.
The central bank has hiked benchmark lending rates by 140 basis points since May this year to curb soaring inflation. It’s next policy decision is due on September 30.
Last week, finance minister Nirmala Sitharaman had said inflation management cannot be “singularly” left to the monetary policy as a majority of activities are outside its purview in the current context.
Speaking at a seminar organised by economic think-tank Icrier, the finance minister said that both the fiscal policy and the monetary policy have to work together to contain inflation.
“The RBI will have to synchronise somewhat, maybe not as much synchronised as other western developed countries would do. I am not prescribing anything to the Reserve Bank…
“I am not giving any forward direction to the RBI but it is the truth that India’s solution to handling the economy, part of which is handling inflation also is an exercise where the fiscal policy, together with the monetary policy has to work,” she said.
The minister further said there are economies where policy is designed in such a way that the monetary policy and the interest rate management is the one and the only tool to handle inflation, she said.