Business Desk – Retail Inflation: Retail inflation has once again increased in the country. Retail inflation increased to 4.45% in July 2026. This is the seventh consecutive month when an increase in Retail Inflation has been recorded. This rate was 4.38% in June. That means the inflation rate has increased by 0.07 percent in a month.
The biggest reason for increase in inflation was Food Inflation i.e. increase in prices of food items. Food inflation increased to 5.52% in July, while it was 5.32% in June. The increase in prices of everyday items like potatoes and onions has had a direct impact on the household budget.
Inflation above RBI's 4% target for the second consecutive month
Retail inflation for July has been above RBI's 4% inflation target. This is the second consecutive month when retail inflation has been above the Reserve Bank's 4% target. The increase in inflation is important for the common people because it directly impacts the household ration, food items and daily expenses. If prices increase for a long time, the monthly budget of families may be affected.
Food inflation 5.52%, potato and onion increased expenditure
Food inflation increased to 5.52% in July. In June it was 5.32%. This means that in just one month, the inflation of food items also increased. The example of onion can be taken to understand the effect of prices on food items. Suppose a family needs 10 kg of onion every month and the price of onion on normal days is Rs 30 per kg. In such a situation, the monthly expenditure will be around Rs 300.
If the price increases by 4.73% then the price of 10 kg onion will be around Rs 314. That means the family will have to pay about Rs 14 more. But if the price increases by 22.54%, then it will cost around Rs 368 to buy 10 kg onion. That means, you will have to spend about Rs 54 more in July than in June.
What does 4.45% inflation mean for the common man?
When it is said that Retail Inflation was 4.45% in July 2026, it does not mean that the price of every item has increased by 4.45%. This is the average inflation rate based on the Consumer Price Index (CPI). CPI includes hundreds of goods and services used in people's everyday lives. In these, the price of some things may increase more, the price of some may decrease and there may be no change in the price of some things. The average change that comes out by combining the prices of all these things is called Retail Inflation Rate.
How much does a thing worth Rs 100 cost?
Understand this with an easy example. If an item was priced at Rs 100 in July 2025 and the price of that item increased by 4.45% in a year, then in July 2026 its price would be around Rs 104.45. However, the prices of all the commodities included in CPI do not increase equally. Therefore, 4.45% does not mean that every Rs 100 item in the market is now worth Rs 104.45.
How does inflation increase and decrease?
Inflation is directly related to Demand and Supply. If people have more money to spend and the demand for an item increases, but its supply does not increase as much, then prices may increase.
On the contrary, if the supply of a good is high and its demand is low, then there may be less pressure on its prices. Weather, crop, production, transportation costs, raw material prices and international markets also affect inflation.
Now RBI and market keep an eye on further data
The continuous increase in Retail Inflation is also important for the Monetary Policy of RBI. The central bank looks at several indicators such as inflation and economic activity while taking decisions related to interest rates. Currently, 4.45% Retail Inflation and 5.52% Food Inflation have been recorded in July. In such a situation, the direction in which the prices of food items go in the coming months will be the most important factor for the next inflation figures.