India's retail inflation jumps to 7 per cent in August on higher food prices

India's retail inflation jumped to 7 percent in August as against 6.71 percent in July, government data showed on Monday. Inflation has been the biggest concern for the government and the RBI, and this is the eighth straight month when the numbers are above the central bank's upper range of 6 percent.

The annual food price inflation is even higher at 7.62 percent. The surge last month was driven largely by fuel, clothing, and food and beverages, government data show.

According to the government data published today, inflation in the food basket was 7.62 percent in August, up from 6.69 percent in July and 3.11 percent in August 2021.

The latest numbers are likely to prompt the RBI to go for another rate hike. The central bank in an attempt to tame inflation has increased policy rates by 140 basis points since May this year. The RBI in a report published last month said that the impact of its consecutive rate hikes may have been visible in the July inflation number which fell to 6.71 percent in July from 9.1 percent in June.

The report further stated that perhaps the most heartening development in recent times had been the easing of inflation in July by 30 basis points from June and an appreciable 60 basis points from the average of 7.3% for Q1:2022-23.

"This has validated our hypothesis that inflation peaked in April 2022. For the rest of the year, the RBI’s projections scent a steady easing of the momentum of price changes," the report said, adding that the inflation will fall from 7 to 5 percent in Q1 next financial year - within the tolerance band.