WEB DESK
India’s retail inflation soared to an eight-year high of 7.79% in April this year, which may prompt the Reserve Bank to go in for another interest rate hike in the next month policy review to tame price rise.
The previous high in the consumer price index (CPI)-based retail inflation was recorded at 8.33% in May 2014.
The jump in CPI inflation has been long anticipated following the Centre’s decision to wait until after key state elections in March to hike fuel prices. Energy prices globally have soared since Russia’s invasion of Ukraine in late February.
India’s industrial production has grown a lacklustre 1.9% on year in March, pulled down by an unfavourable base effect and price rise. Industrial production had grown 1.7% in February as well.
Industrial production had soared 24.2% in March last year.
Food inflation, which accounts for nearly half the consumer price index (CPI) basket, reached a multi-month high in April and remained elevated due to higher vegetable and cooking oil prices globally. Inflation in the food basket rose to 8.38% in April from 7.68% in the preceding month and 1.96% in the year-ago month.
The rate of price rise in ‘fuel and light’ category in the retail inflation basket quickened to 10.80% in April this year from 7.52% in the preceding month.
In the ‘oils and fats’ category, inflation remained at an elevated level of 17.28% (18.79% in March 2022) during the month, 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, Ukraine is a key supplier of fertiliser to India.
Vegetables witnessed an inflation print of 15.41% during the month as against 11.64% in March, the data showed.
Meanwhile, news reports said the central bank is likely to raise inflation projections in the MPC meeting next month and would also consider a rate hike to tame inflation, which is above its comfort level.
Earlier this month, the MPC raised the key policy rate (repo) by 40 basis points with an aim to tame the rising inflation. It was the first rate hike after August 2018.
As per the Index of Industrial Production (IIP) data released by the National Statistical Office (NSO), the manufacturing sector’s output grew 0.9% in March 2022.
