India's Consumer Price Inflation Touches 10.03% in August

The country's annual consumer price inflation (CPI) accelerated as food price inflation touched 12.03 percent in August from 11.53 percent in the previous month. The prices of vegetables rose 20.79 percent, those of oil and fats increased 18.41 percent and sugar price were up 17.51 percent.

The inflation for the rural areas increased to 9.90 percent in August from 9.76 percent in July while the urban retail inflation rose to 10.19 percent from 10.10 percent in July.  

Other products that saw a sharp rise include pulses and products (16.04 percent) and food and beverages (12.03 percent).

The final figures for the inflation in July for rural, urban and combined stood at 9.76 percent, 10.10 percent and 9.86 percent respectively. 

The inflation in August was not affected by the recent hike in diesel prices. The hike in diesel prices further pushed the inflation up in September.

The current rate of inflation is too above the comfort levels of the Reserve Bank of India to initiate the monetary easing. The RBI refrained from cutting the key interest rates in its mid-year quarterly policy review meeting held Monday, citing the high inflation in the country. This is despite the government announcing key reforms like allowing FDI in retail, aviation and broadcast sectors to boost growth.

The RBI has said that the Inflation is still a concern limiting the bank's elbow room in monetary policy easing.  As inflationary tendencies have persisted, the primary focus of monetary policy remains the containment of inflation and anchoring of inflation expectations.

The RBI uses the Wholesale Price Index to monitor the inflationary forces in the country. The headline inflation, as measured by the Wholesale Price Index, increased to 7.55 percent in August from 6.87 percent in July due to higher food prices and deficient monsoon, data released last week by the Ministry of Commerce and Industry showed.