NSO : Retail inflation
accelerates to 7.79% in April; March IIP growth at 1.9%
by rising food and fuel prices, 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
previous high in the consumer price index (CPI)-based retail inflation was
recorded at 8.33% in May 2014.
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
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.
production had soared 24.2% in March last year.
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
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.
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.
Ukraine is a key supplier of fertiliser to India.
witnessed an inflation print of 15.41% during the month as against 11.64% in
March, the data showed.
surge in the CPI inflation has clearly justified the off-cycle rate hike last week,
and significantly raised the likelihood of a back-to-back rate increase in June
2022. We see a higher base softening the May 2022 CPI inflation print, although
it will remain above 6.5%," said Aditi Nayar, Chief Economist, ICRA.
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.
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.
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
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
output climbed 4%, and power generation increased 6.1%.
2021-22, the IIP grew 11.3% as against an 8.4% contraction in 2020-21.
production has been hit due to the coronavirus pandemic since March 2020, when
it had contracted 18.7%.
shrank 57.3% in April 2020 due to a decline in economic activities in the wake
of the lockdown imposed to curb the spread of coronavirus infections.