The incident has reportedly taken place in a predominantly Shia district after an SUV packed with explosives was detonated near a beauty salon.
Iraqi police and hospital sources have told Reuters that the car bomb was detonated during a rush.
The Islamic State of Iraq and the Levant group (ISIL, also known as ISIS) issued a statement following the explosion, claiming responsibility for the attack.
The statement further added that the assault was carried out by a suicide bomber but the Iraqi officials have denied the claimed by the terror group.
The officials meanwhile have said there are fears the death toll will rise further.
This comes as at least 18 people were killed in a similar attack targeting Shia pilgrims commemorating the death anniversary of revered imam in Baghdad last week.
ISIS also claimed responsibility for the attack which followed nearly three months after the terror claimed a twin suicide bombing in Sadr City that killed 70 people.