Inflation rises to 12-month high of 6.8% in July

Headline inflation as measured by the Year-on-Year change based on the National Consumer Price Index (NCPI) has been compiled at 6.8% in July as against 6.1% in June.  

The July figure also shows a 12-month high and confirms the rising trend witnessed since January this year.

Core inflation, which reflects the underlying inflation by excluding volatile items of food, energy and transport groups in the economy as measured by the Year-on-Year change based on NCPI for the month of July 2021 was increased to 4.4% from 4.1% reported in the month of June 2021. The Department of Census and Statistics said contributions to the inflation rate of July 2021 from food group and non-food group are 5.1% and 1.7% respectively. Whilst contributions of food and non-food groups to the inflation in July 2020 were 5.6% and 0.5% respectively, resulting in a headline inflation of 6.1%. 

With respect to July 2020, the reported increase in percentage of food group was mainly due to higher price levels prevailing in July 2021, particularly prices of rice, vegetables, coconuts, coconut oil, big onions and Mysore dhal.

Comparing the month-on-month changes, NCPI in July 2021 has increased to 146.6 from 145.7 reported in June 2021. This shows an increase of 0.9 index points or 0.6 percentage as compared to June 2021. The month-on-month change was contributed by increases of index values of food items by 0.37% and non-food items by 0.27% respectively.

Price increases of food items were reported for sugar, vegetables, dried fish, fresh fish, eggs, potatoes, Mysore dhal, chicken, rice, biscuits, canned fish, fresh fruits, rice flour, turmeric powder, kurakkan flour and wheat flour. However, decreases in index values were reported for coconuts, coconut oil, big onions, red onions and green gram.

The increases in index values of non-food groups in July 2021 compared to the previous month was mainly due to the price increases in groups of items ‘Transport’ (petrol, diesel and taxi/three wheelers fare), ‘Restaurants and Hotels,’ ‘Alcoholic Beverages, Tobacco and Narcotics’ (arecanuts), ‘Clothing and Footwear,’ ‘Furnishing, Household equipment and Routine household maintenance,’ ‘Recreation and Culture’ and ‘Miscellaneous Goods and Services’.

Further, very slight price increases were reported in groups of ‘Housing, Water, Electricity, Gas and Other fuels’ and ‘Health’.  

The price indices of ‘Communication’ and ‘Education’ groups remained unchanged during the month.