New Delhi: Signs of rising retail inflation have resurfaced in India, with the government releasing new data on Thursday based on the Consumer Price Index (CPI). Retail inflation in August 2024 has shown a slight increase compared to July 2024, standing at 3.65%. Notably, inflation rates in rural areas have surpassed those in urban areas, indicating that the economic strain is more acutely felt by poorer populations.
According to the latest figures, CPI-based inflation in July was recorded at 3.60%. This August’s rate, though marginally higher, marks a significant reduction compared to the same period last year when inflation was at 6.83%, reflecting a nearly 50% decrease over the year.
Rural Inflation Surges Ahead
The latest data highlights a widening gap between rural and urban inflation rates. Rural inflation climbed to 4.16% in August 2024, compared to 3.14% in urban areas. This is up from 4.10% in rural areas in July 2024, while urban inflation was recorded at 3.03%.
The trend is consistent with figures from August 2023, when rural inflation stood at 7.02%, significantly higher than the 6.59% rate recorded in urban areas. These numbers point to a growing disparity in inflation’s impact, with rural households facing a sharper rise in the cost of living.
Food Prices Drive Inflation
A substantial contributor to the overall inflation rate is the rise in food prices, as measured by the Food Price Index. In August 2024, food inflation rose to 5.66%, up from 5.42% in July. However, this represents a marked decline from August 2023, when food inflation peaked at 9.94%.
Among food items, pulses and related products, such as gram flour, experienced the highest price increase, with an inflation rate of 14.36% in August 2024. The continued rise in food prices is a concern for policymakers, especially as it disproportionately affects lower-income households.
Despite these increases, overall inflation remained below the 4% target set by the Reserve Bank of India (RBI) for the second consecutive month. The RBI is tasked with maintaining inflation at or below this level to ensure economic stability.
Industrial Production Slows
In a related development, the Office for National Statistics also released industrial production data on Thursday, revealing a slowdown in growth. Industrial production, as measured by the Index of Industrial Production (IIP), grew by 4.8% in July 2024, down from 6.2% in the same month last year. The decline is attributed to weaker performance in the mining and manufacturing sectors.
The combination of rising inflation, particularly in rural areas, and a slowdown in industrial growth presents a challenging scenario for India’s economic outlook. As food prices continue to climb and rural inflation remains elevated, policymakers face the dual task of managing inflationary pressures while supporting economic growth.
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