The country’s retail inflation in April accelerated to an eight-year high of 7.79 per cent, on continued high food prices. Inflation in the food basket rose to 8.38 per cent in April, from 7.68 per cent in the preceding month and 1.96 per cent in the year-ago month.
The latest inflation rate in April remains above the RBI’s comfort zone of 2-6 per cent. This is the fourth consecutive month when the Consumer Price Index (CPI)-based inflation is beyond the central bank’s target limit.
The CPI-based inflation in March this year stood at 6.95 per cent, and was at 4.23 per cent in April last year. Inflation in the food basket rose to 8.38 per cent in April from 7.68 per cent in the preceding month and 1.96 per cent in the year-ago month.
Suvodeep Rakshit, senior economist at Kotak Institutional Equities, said: “The April CPI inflation print of 7.79 per cent is in line with our estimate of 7.78 per cent. The increase in a sequential basis as expected was led by food (mainly cereals, edible oils, fruits, and spices), fuel products, and components of household-related goods and services. Rural inflation continued to outpace urban inflation for the fourth consecutive month and will add to the concerns on rural demand.”
Rakshit added that core inflation continues to increase and the April print around 7.3 per cent will be a concern for policy formulation. April headline inflation print is likely to be the peak for the year. “However, we do not expect inflation to go below 6 per cent for the rest of the year with prints over the next few months remaining around 7-7.5 per cent.”
PHDCCI President Pradeep Multani said, “Escalation in CPI inflation to 7.8% in April 2022 is stocked by high energy and food prices viz-a-viz uncertainty caused by geo-political conflict. We look forward to calibrated policy measures by the Government to address the supply constraints.”
The retail inflation has remained above 6 per cent since January 2022. The inflation level of 7.79 per cent in April is the highest since September 2014.
After the off-cycle Monetary Policy Committee (MPC) meeting of RBI last week, RBI Governor Shaktikanta Das had said the adverse effects of the unprecedented high global food prices due to the ongoing geopolitical situation are reflecting in the domestic market as well, and going forward inflationary pressures are likely to continue.
Index of Industrial Production Rises 1.9%
Meanwhile, the country’s industrial production rose 1.9 per cent in March this year, according to the latest Index of Industrial Production (IIP) data released on Thursday. The industrial production had grown 24.2 per cent in March 2021.
According to the latest IIP data released by the National Statistical Office (NSO), the manufacturing sector’s output grew 0.9 per cent in March 2022. Mining output rose four per cent and power generation jumped 6.1 per cent.
The Index jumped 11.3 per cent in the full financial year 2021-22, compared with an 8.4 per cent decline in 2020-21. The industrial production had declined 57.3 per cent in April 2020 due to the coronavirus pandemic-induced lockdown, which had stopped almost all economic activities in the country.
Vivek Rathi, director (research) at Knight Frank India, said, “In March 2022, IIP grew by 1.9 per cent, indicating at the economy’s resilience despite intensifying price pressures. Industrial production growth was led by sharp sequential recovery across all the categories. The sooner the geopolitical tension on account of war and trade sanctions ease, better it will get for global economic growth and price stability.”
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