Retail inflation rose to a 15-month high of 7.44% in July, largely due to higher vegetable and grain prices. Food inflation was 11.51%, the highest monthly data in nearly three years. Tomatoes, other vegetables, legumes and spices are the main contributors to this price spiral.
The center has implemented multiple measures to mitigate these price increases, some of which are already starting to bear fruit (such as the recent drop in tomato prices at the retail level over the past two weeks).
Looking ahead, government officials have clarified that tougher measures are planned. However, the key variable in this equation is monsoon. The rain has stopped for a long time now, but one report says August could be the wettest on record.
There could be further pressure on prices if the monsoon season does not recover significantly, especially if existing crops in Kharif start to deteriorate.