Retail inflation cut short its three-month declining trend and inched up to 7 per cent in August mainly due to higher food prices, according to official data released on Monday.

The consumer price index (CPI) based inflation was 6.71 per cent in July and 5.3 per cent in August 2021.

The CPI inflation has remained above the RBI's comfort level of 6 per cent for the eighth month in a row. The Reserve Bank factors in retail inflation while deciding on its monetary policy.

According to the data released by the National Statistical Office (NSO), inflation in food basket was 7.62 per cent in August, up from 6.69 per cent in July and 3.11 per cent in August 2021.

The rate of price rise was in excess of 10 per cent in case of vegetables, spices, footwear, and 'fuel and light' on annual basis.

However, there was contraction in inflation in egg and almost flat in protein rich 'meat and fish' during the month.

Inflation had reached a high of 7.79 per cent in April before decelerating in the next months to 6.71 per cent in July.

The government has tasked the Reserve Bank to ensure CPI inflation remains at 4 per cent with a margin of 2 per cent on each side.

Meanwhile, the Union Finance Ministry has said that increase in inflation is attributable both to "an adverse base effect and an increase in food and fuel prices - the transient components of CPI inflation".

However, the ministry expressed optimism that export curb imposed by the government on atta, rice, maida, etc will moderate prices of these items.

"Government has prohibited exports of food products like wheat flour/atta, rice, maida, etc to keep domestic supplies steady and curb rise in prices. The impact of these measures is expected to be felt more significantly in the coming weeks and months," the ministry said.

(With inputs from PTI)