Having touched 15-month high of 7.4 per cent in July, retail inflation is expected to remain elevated in August as well, due to rising prices of cereals, sources said.

The August inflation print is scheduled to be announced on September 12.

However, sources said, it is expected to start moderating from September onwards due to fall in prices of vegetables like tomatoes, restrictions imposed on the export of non-basmati rice and cut in the prices of domestic LPG cylinders.

Last week, RBI Governor Shaktikanta Das also said that the central bank expects inflation to moderate from September onwards.

"We expect overall inflation to start moderating from September onwards. August inflation will be again very high, but we expect from September onwards inflation to go down," he had said.

Das had said that prices of tomatoes have already fallen and retail prices of other vegetables are also expected to come down from this month.

The RBI Governor had said that the government has taken several steps to ensure the supply of tomatoes and other items of common need to the people at affordable prices.

The Reserve Bank of India is likely to review incremental Cash Reserve Ratio on September 8, sources said.

Last month, RBI had imposed a 10 per cent incremental cash reserve ratio for a limited period to help suck out Rs 1 lakh crore of excess liquidity from the system.

The move, announced along with the bi-monthly policy review, was the best option under the current circumstances and there is enough liquidity in the system for the banks to continue their lending operations, he had said.

The decision aimed at neutralising the impact of liquidity following deposit of Rs 2,000 currency notes which are being withdrawn from circulation.

As much as 93 per cent (or Rs 3.32 lakh crore) of such notes have already come back to the system and only Rs 24,000 crore are left.

The last date for exchange or deposit of such currency notes is September 30, 2023.

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