Inflation inches up to 4.45 pc in Jul on higher food prices: Govt data

NEW DELHI: Retail inflation inched up to 4.45 per cent in July on expensive kitchen staples, including onion and ginger, even as the price rise remained above the Reserve Bank's median target for the second consecutive month, according to government data.

The consumer price index (CPI) based retail inflation was 4.38 per cent in June.

The July reading is the highest since the new series, with base year 2024, came into effect from January.

Food inflation in July rose to 5.52 per cent from 5.32 per cent in the preceding month, according to CPI data released by the National Statistics Office (NSO).

Inflation in onions increased significantly to 22.54 per cent in July against 4.73 per cent in June. The rate of price rise in ginger shot up to 83.62 per cent. Inflation in garlic also rose significantly.

On the other hand, inflation in potatoes, ladyfinger, peas and tomatoes was negative.

Earlier this month, Reserve Bank Governor Sanjay Malhotra said the higher inflation is mostly on account of fuel and food, with few signs of generalisation of price pressures so far.

Core inflation excluding precious metals continues to be benign.

As projected earlier, Malhotra said the headline inflation is expected to rise further in the near term and peak in Q3 2026-27, primarily due to food and fuel, before moderating thereafter.

The central bank has projected the CPI inflation for 2026-27 at 5 per cent, marginally lower than its June estimates.

The government has mandated the Reserve Bank to ensure retail inflation remains at 4 per cent with a margin of 2 per cent on either side.

The NSO data further showed that while the national average inflation was 4.45 per cent (provisional) in July, corresponding CPI rates for rural and urban areas were 4.84 per cent and 3.96 per cent, respectively.

Telangana had the highest inflation at 6.32 per cent, and Mizoram (1.84 per cent) recorded the lowest during July, according to the NSO data.

Dipti Deshpande, Senior Director and Principal Economist, Crisil, said July brought some relief on the inflation front, as food inflation saw a slower rise and non-food inflation was steady.

"However, this comfort may prove short-lived. Adverse base effects for food inflation, higher edible oil prices, the fading impact of GST rate cuts and a gradual pass-through of input costs, particularly transportation costs, are expected to push inflation higher in the coming months," she said.

Megha Arora, Director, India Ratings and Research, said the fuel impact was evident on user groups – transport prices increased 4.43 per cent (June 2026: 4.31 per cent; May 2026: 1.75 per cent), while restaurant and accommodation services grew 7.72 per cent (June 2026: 6.91 per cent; May 2026: 5.75 per cent) underlining the impact of ongoing West Asia conflict on commercial liquified petroleum gas.

"Persistent upside risks are posed by geopolitical tensions and the El Nino weather pattern, though some improvement in the latter could be visible in the August print. Crude price volatility is expected to continue with oil likely to hover around USD 80-85/bbl in the coming weeks," she added.

NSO collects real-time price data from selected 1,407 urban markets (including online markets) and 1,465 villages across the country.