India’s retail inflation as measured by the Consumer Price Index (CPI) rose to 7.79% in April due to rising fuel and food prices, according to data released by the Statistics Ministry.
The spike in retail inflation was anticipated following a surge in fuel prices following state surveys earlier this year in March. The rise in energy prices around the world since the war between Russia and Ukraine also contributed to the rise in inflation.
The official upper tolerance limit for CPI inflation is 6% and has been breached consecutively for the last three months. It was registered 6.01% in January, 6.07% in February and 6.95% in March.
According to the Bloomberg survey, the increase in inflation was expected to be around 7.43%. Meanwhile, other economists had expected the figure to remain in the 8% range. Today’s reading is expected to add pressure on the RBI to act faster.
Earlier, Reserve Bank of India Governor Shaktikanta Das told his unscheduled Central Bank meeting on May 4 that retail inflation is likely to be elevated.
The Monetary Policy Committee or MPC of the Central Bank held an impromptu meeting on May 2-4 to declare a 40 basis point increase in the repo rate along with a 50 basis point increase in the cash reserve ratio. or CRR. The current Repo Rate stands at 4.4% and the CRR at 4.5%.
The RBI is scheduled to meet on June 6 and economists believe that inflation is likely to go unchecked in the near future. They expect monetary policy to tighten further.
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