New Delhi, Aug. 14: Inflation reached a five-month high of 5.79 per cent in July on the back of a spike in the prices of onion and other vegetables.
Inflation based on the wholesale price index (WPI) stood at 4.86 per cent in June, while in July 2012, it was 7.52 per cent. The July number is above the Reserve Bank’s comfort level of 4-5 per cent inflation. It is also the highest level of inflation since February 2013, when it was 7.28 per cent.
WPI inflation in food articles rose to 11.91 per cent from 9.74 per cent in June, driven by the rising prices of onions, cereals and rice. Food articles have a 14.34 per cent share in the WPI basket. Inflation in food articles has risen for the third straight month.
Onion prices on an annual basis more than doubled in July, shooting up 145 per cent. In some parts of the country, prices of onion soared to Rs 80 per kg.
The government has asked co-operative major National Agricultural Cooperative Marketing Federation of India to import onion to boost domestic supplies and check price rise. It also imposed a minimum export price of $650 per tonne on onion to curb its shipment.
Officials said heavy rains in July damaged crops in some parts of the country, especially vegetables, which led to the spike in prices.
Finance minister P. Chidambaram also said that there was a need to address the supply-side constraints to bring down prices.
“The mandate of price stability must be seen as part of the larger mandate and the larger mandate is growth and employment,” he said in the Rajya Sabha during a debate on the state of economy.