Retail Inflation Breaks 8-Year Record In India: Increases To 7.79% As Food, Fuel Price Surge To New Heights
India’s retail inflation rose to 7.79% in April, largely driven by increasing fuel and food prices, government data showed on Thursday. The consumer price-based inflation figure stayed well over Reserve Bank of India’s (RBI’s) upper tolerance limit for the four months straight
In April, the CPI inflation surged at the highest speed in eight years. The previous high was recorded at 8.33% in May 2014. In the previous year, April’s print was higher than 6.95% in March and 4.23%.
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Food basket inflation
Inflation in the food basket went up to 8.38% in April from 7.68% in the previous month. Food inflation, which accounts for nearly half the consumer price index (CPI) basket, reached a multi-month high in April and may stay elevated due to higher vegetable and cooking oil prices across the world.
Fuel and light category inflation
The rate of price rise in the ‘fuel and light’ category in the retail inflation basket accelerated to 10.80% in April this year from 7.52% in the previous month.
Oil and fats category inflation
In the ‘oils and fats’ category, inflation remained at an increased level of 17.28% in April as Ukraine is one of the major sunflower oil producers in the world and India imports a large portion of the commodity from the country. Ukraine is also a crucial supplier of fertiliser to India.
Vegetables witnessed an inflation print of 15.41% during the month as against 11.64% in March. The Reserve Bank has been required by the Centre to keep the retail inflation between 2% to 6%.
RBI increased it’s repo rate after 4 years
The increased price outlook prompted RBI to raise its repo rate for the first time in four years, lifting it by 40 basis points (bps) to 4.40% in an off-cycle meeting earlier this month. Repo rate is the rate at which RBI lends money to commercial banks.
On the global front, the U.S. Federal Reserve also increased its interest rate by 50 bps which is the highest in 22 years.
Central banks have also indicated future rate hikes to bring down rising inflation. Another set of government data conveyed that the factory output rose 1.9% in March this year.
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