Retail inflation in India increased to 7.79% in April, largely because of rising fuel and food prices, government data showed. The consumer price-based inflation figure stayed well above the Reserve Bank of India’s (RBI’s) upper tolerance limit for a fourth straight month. RBI has been directed by the Centre government to keep the inflation between 2% to 6% for a five-year period ending March 2026.
India’s factory output, measured in terms of Index Industrial Production (IIP), witnessed a growth of 1.9% in March, according to separate data released by the Ministry of Statistics & Programme Implementation (MoSPI).
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Retail inflation in March stood at 6.95%. Retail inflation is now at the highest level since the 8.83% hit in May 2014.
Rural inflation surged to 8.83% in April as compared to 7.66% in March and 3.75% in April 2021. Urban inflation in April stood at 7.09% as compared to 6.12% in March and 4.71% in April 2021.
Food inflation, which accounts for nearly half the consumer price index (CPI) reached a multi-month high in April and is likely to remain elevated due to higher vegetable and edible oil prices globally. The CPI data is mainly considered by RBI while making its bi-monthly monetary policy.
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The overall food inflation in April stood at 8.38%, against 7.68% in March and 1.96% in April 2021.
The higher price outlook triggered the RBI to hike its repo rate for the first time in four years, increasing it by 40 basis points (bps) to 4.40% in an off-cycle meeting earlier this month. This was the first-rate move in two years and its first hike in nearly four years. The Repo rate is the rate at which RBI lends money to commercial banks.
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“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.
The US Federal Reserve also increased its interest rate by 50 bps, the highest in 22 years. Globally, the central banks have indicated future rate hikes to bring down soaring inflation.