The urban poor have been hit the most by a 15-month high consumer price inflation (CPI) in July, an arm of a domestic rating agency said on Wednesday.
In a note, Crisil Market Intelligence and Analytics said that higher income groups in urban areas faced the least inflationary burden as the share of food in their consumption is relatively low.
“The poorest section in urban areas faced the highest inflation rate in July,” said a note released days after the official data showed headline inflation rose to 7.44 per cent for July.
“The poorest sections in both urban and rural areas faced a higher inflationary burden than their higher-income counterparts, as food inflation rose sharply,” the CRISIL note said.
Crisil said it used data from the National Sample Survey Organization (NSSO) and mapped the expenditure baskets of three broad income groups, bottom 20 per cent, middle 60 per cent and upper 20 per cent of the population, with July inflation.
Overall CPI inflation for the bottom 20 percent of income earners in urban areas was 8.5 percent in July, compared with 7.9 percent for their rural counterparts, the note said, adding that the same number was 4.9 percent and was 4.7 percent. , respectively, in June.
The note shows that in comparison, the degree of change was more gradual for the top 20 percent of income earners between July and June.
The CPI for the top 20 percent of income earners in urban areas rose from 5 percent in June to 7.1 percent in July, while it rose from 4.9 percent to 7.3 percent for rural areas.
The note said that higher income groups in urban areas faced the least inflationary burden, as the share of food in their consumption basket is relatively low.
Within the poor, the poorest in urban areas faced a greater burden than their rural counterparts as food (12.3 percent in urban versus 11 percent in rural) and fuel inflation (4.4 percent versus 3.3 percent) were both higher . The former than the latter, the agency said.
Meanwhile, the rating agency raised its FY24 composite CPI forecast to 5.5 per cent from 5 per cent earlier after the release of July data.
The extent of the sharp increase in July came as a surprise, it said, adding that early signs point to minimal respite in August.
Higher-than-expected inflation and continuing pressure on food prices despite moderation have put monetary policy in a quandary.
It expects the Monetary Policy Committee to hold rates at its next meeting in October and cut rates only in the early part of the next fiscal.
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