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NEW DLEHI: Retail inflation inched close to the 7% mark in July, accelerating higher than expectations on the back of hardening food prices. The consumer price index rose an annual 6.9% in the previous month, higher than the upwardly revised 6.2% in June, dashing hopes of any interest rate cuts for now. Food inflation soared to an annual 9.6% in July from 8.7% in the previous month as supply disruptions continued to take toll.
“We think the high inflation reading will merely push back the timeline for further rate cuts, though they are expected to take place by the fourth quarter of 2020 and/or first quarter of 2021. We continue to expect an additional 50bps rate cut by the RBI during FY21,” said Kunal Kundu, India economist at investment bank Societe Generale.
Meat and fish prices rose 18.8%, while pulses and products soared 15.9%. Oils and fats surged 12.4%, while vegetables shot up 11.3%, and spices were dearer by 13.3% during the month. Prices of personal care products and services rose 13.6%, which economists attributed to the rising sanitisation costs due to the pandemic.

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