Retail inflation at 8-year high of 7.79% in April

India CPI Inflation, IIP Growth Rate: Retail inflation surged to a near 8-year high of 7.79 per cent in April, persisting above the Reserve Bank of India’s (RBI’s) inflation target for the fourth straight month, data released by the National Statistical Office (NSO) showed Thursday.

High price levels of fuel and food items, especially of vegetables, spices and oils/fats, along with household services, contributed to the sharp rise in inflation, a level which is seen as being partly responsible for preempting the unscheduled repo rate hike of 40 basis points by the RBI last week.

The food price inflation (combined for rural and urban) surged to a 17-month high of 8.38 per cent in April from 7.68 per cent in March. Rural inflation rose to an 8-year high of 8.38 per cent in April, while urban inflation was at a 18-month high of 7.09 per cent. The previous high of the headline retail inflation was recorded at 8.33 per cent in May 2014.

Among states, the highest inflation rate was recorded by West Bengal, followed by Madhya Pradesh and Telangana. Core inflation — the non-food, non-fuel component of inflation — in April also touched a 95-month high of 6.97 per cent, remaining more than 5 per cent for 24 consecutive months.

Experts said the base effect may moderate inflation levels in May but it is still expected to remain above 6.5 per cent, raising expectations of a back-to-back rate hike in the June monetary policy meeting of the RBI.

Inflation is being seen as posing the “biggest threat” to the economy and the RBI is looking at reversing all measures — liquidity infused and policy rate cuts — taken during the pandemic over the next 1-2 years along with measures to kill demand.