Riding on tomatoes, how vegetable prices soar inflation?

The inflation in the food basket was 11.51 percent in July compared to 4.55 percent in June and 6.69 percent in July 2022

- VINEET GUPTA

A shocker came for the country when the government released data saying the Consumer Price Index (CPI) inflation or the retail inflation skyrocketed at 7.44% riding on high vegetable prices, precisely the tomato.

The surge in inflation was on a 15-month high, and way above the RBI’s flexible tolerance band of 2-6%.

The spurt in CPI inflation in July 2023 was on expected lines, however, 7.44% retail inflation was totally unexpected.

At the August MPC, RBI decided to maintain the pause over the repo rate and maintain the withdrawal of accommodation stance. The move was taken to ensure that inflation progressively aligns with the target while supporting growth.