India’s retail inflation surged to 7.79 per cent in April, largely driven by rising fuel and food prices, government data showed on Thursday. The consumer price-based inflation figure stayed well above Reserve Bank of India’s (RBI’s) upper tolerance limit for the fourth consecutive month.
In April, the CPI inflation expanded at its highest pace in eight years. The previous high was recorded at 8.33 per cent in May 2014.
April’s print was higher than 6.95 per cent in March and 4.23 per cent a year ago.
Inflation in the food basket rose to 8.38 per cent in April from 7.68 per cent 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 can remain elevated due to higher vegetable and cooking oil prices globally.
The rate of price rise in ‘fuel and light’ category in the retail inflation basket quickened to 10.80 per cent in April this year from 7.52 per cent in the preceding month.
In the ‘oils and fats’ category, inflation remained at an elevated level of 17.28 per cent in April as Ukraine is one of the major sunflower oil producers in the world and India imports a major portion of the commodity from the war-ravaged country. Besides this, Ukraine is also a key supplier of fertiliser to India.
Vegetables witnessed an inflation print of 15.41 per cent during the month as against 11.64 per cent in March.
RBI mainly considers the retail inflation figure while arriving at its bi-monthly policy decision.
The Reserve Bank has been mandated by the Centre to keep the retail inflation between 2 per cent to 6 per cent.
The elevated price outlook pushed RBI to hike its repo rate for the first time in four years, lifting it by 40 basis points (bps) to 4.40 per cent 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, U.S. Federal Reserve also increased its interest rate by 50 bps, the highest in 22 years.
Central banks have also indicated future rate hikes to bring down surging inflation.
Another set of government data conveyed that the factory output rose 1.9 per cent in March this year.