Retail inflation in India surges to 8-year high of 7.79% in April

The headline inflation is now at the highest level since 8.33% hit in May 2014.

Analysts had expected the CPI inflation to be around 7.5%, up from 6.95% in the month of March & 4.23% 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 rose to 8.38% in April as compared to 7.66% 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% in April 2021.

ET Online

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 Shaktikanta Das said as he announced that the MPC had unanimously voted to increase the policy repo rate.

“We raise our CPI forecast for FY23 to 6% from 5.3-5.5% earlier. The Russia-Ukraine crisis is dragging on for longer, keeping crude oil prices elevated above US$100/bbl against our base case of ~US$80-90/bbl,” said Teresa John, an economist at Nirmal Bang. A US$10/bbl increase in crude oil prices adds around 25 bps to the baseline inflation.