Inflation faced by Indian consumers raced to an almost eight-year high of 7.8% in April, from 6.95% in March, with rural inflation accelerating to 8.4%, and urban shoppers experiencing an almost 1 percentage point month-on-month quickening at 7.1%, data released by the National Statistical Office on Thursday show.
Food costs led the surge with inflation measured by the Consumer Food Price Index (CFPI) jumping to a 17-month high of 8.4% from March’s 7.7%. Food prices rose at a faster clip of 8.5% in rural India.
This is the fourth month in a row that retail inflation has remained above 6%, which is the upper tolerance threshold for inflation under the monetary policy framework. Economists said the sharp acceleration in retail inflation explained the central bank’s rush to raise interest rates in an off-cycle meeting last week, adding that the move was likely to be backed by another rate increase in the coming policy review next month.
Crude price surge
“Driven by continued global crude price upsurge which impacts food, fuel and light, and transport and communication prices in the CPI basket, India’s April 2022 CPI inflation turned out to be a 95-month high of 7.8%,” noted EY India chief policy advisor D.K. Srivastava.
“It was way back in May 2014 that CPI inflation was at 8.3%,” Mr. Srivastava recalled.
Rural inflation was also at an eight-year high, while several items reported the highest levels in a long time, India Ratings economists Sunil Kumar Sinha and Paras Jasrai wrote in a note. This included miscellaneous goods and services (at a 115-month high at 8.03%) and education, which was at a 23-month high. Inflation in health services was turning structural, staying above 6% for 16 months now, they pointed out.