Retail inflation in India went from 6.71% in July to 7% in August 2022, according to government data. The showcase of data came on the 12th of September after a Reuters poll by 45 economists predicted a downward trend for August.
Following the forecast of the Reuters poll, food prices surged with a special hike in essential crops like wheat, rice, and pulses.
“Food prices have actually gone up for major cereals, pulses, and vegetables on an annual basis because of the production challenges and shortfalls caused by a blistering heatwave,” claimed Kunal Kundu, India economist at Societe Generale.
Adding to the price hikes, the extreme monsoon conditions in India might lead to a fall in crop production, said the Reuters poll.
Inflation in the food basket hiked from 3.11% the last August to 7.62% this August.
Furthermore, the Reserve Bank of India (RBI) is expected to hit a blow as it is already spending billions of dollars to keep the weak Rupee. The situation might also add pressure on the central bank to manically hike interest rates in the coming months.
The RBI’s comfort rate of inflation is 6%, bewildering the bank with responsibility.