An increase in seasonal tomato prices has pushed inflation higher again in India, but the Reserve Bank of India says it remains well within its target range. According to daily price data from India's Department of Consumer Affairs, the price per kg of tomatoes increased around 127% in June from May, and that was enough to result in an overall 2.18% month-on-month increase in food prices and lift the overall CPI index by 1.01% MoM, pushing up the headline inflation rate to 4.81% YoY from 4.25%.
However, seasonal food spikes like this are not uncommon in India. If not tomatoes, then onion prices often surge when exports exceed production at certain times of the year and result in shortages. These price surges tend to correct themselves within a few months.
It also does not appear that there are many other worrying signs in this CPI release, except for a 1.1% increase in education, where prices normally rise in July but seem to have been brought forward a month this year. This, too, will pass and most likely drop out of the index next month.
Source: think.ing.com