According to government data released on Thursday, 12 May, India's consumer price index (CPI)-based retail inflation climbed to an eight-year high of 7.79 percent in April. The rise was largely driven by climbing fuel and food prices. The previous recorded high in retail inflation was 8.33 percent in May 2014. In March 2022, the figure was 6.95 percent – making April 2022 the fourth consecutive month in which the figure stayed well above the Reserve Bank of India's (RBI) upper tolerance limit of 6 percent. Last week, RBI Governor Shaktikanta announced that the Monetary Policy Committee (MPC), in an attempt to inhibit the surge in inflation, had taken a decision to increase the policy repo rate by 40 basis points to 4.40 percent.
After hiking the reserve repo rate by 40 basis points in its off-cycle decision, the Reserve Bank of India’s, monetary policy committee is likely to decide on the exact rate hiked on the basis of its inflationary expectations at that point of time.
The annual inflation rate in India increased to 7.79% in April 2022, the highest since May 2014, and above market forecasts of 7.50%. Food inflation accelerated for the 7th straight month to 8.38%, a new high since November 2020, with cost of oils and fats (17.28%), vegetables (15.41%) & spices (10.56%) recording the biggest rises. Additional upward pressure came from costs of transportation & communication (10.91%), health (7.21%), footwear (12.12%) & clothing (9.51%). The inflation stayed above the 2% to 6% tolerance limit of the central bank for the fourth month in a row.
In India surged to 7.79% on, an annual basis in the month of April owing to higher edible oil & fuel prices, data from the Ministry of Statistics and Programs Implementation showed on Thursday.
The headline inflation is now at the highest level since the 8.33% hit in May 2014. The past data give this information.
Analysts have expected the CPI inflation to be around 7.5 percentage, up from 6.95 percentage in the month of March & 4.23 percentage in April 2021. With this, the headline retail inflation has now remained above the Reserve Bank of India’s 6% upper tolerance level for the fourth consecutive month.
Rural inflation increased to 8.38% in April as compared to 7.66 percentage in March and 3.75%% in April 2021 while urban inflation stood at 7.09% in April as compared to 6.12% in March and 4.71% in April 2021.
Meanwhile, the overall food inflation in April was 8.38%, against 7.68% in the previous month and 1.96 percentage in April 2021.
The core inflation, which is calculated by excluding ‘food and beverages’ and ‘fuel and light’ from the overall inflation, shot up to 6.8% in April from 6.6% in March. The Monetary Policy Committee last week, in an off-cycle move, had hiked rates by 40 bps for the first time since August 2018. “The MPC expects inflation to rule at elevated levels, warranting resolute and calibrated steps to anchor inflation expectations and contain second-round effects,” RBI Governor said as he announced that the MPC had unanimously voted to increase the policy repo rate. "The sharp spike in inflation in April explains the out of turn rate hike by RBI".
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