India’s retail inflation surged to 7.79 per cent in April, largely driven by rising fuel and food prices, government data showed on Thursday. The consumer price-based inflation figure stayed well above Reserve Bank of India’s (RBI’s) upper tolerance limit for the fourth consecutive month.
In April, the CPI inflation expanded at its highest pace in eight years. It stood at 6.95 per cent in March this year.
Inflation in the food basket rose to 8.38 per cent in April from 7.68 per cent in the previous month.
Food inflation, which accounts for nearly half the consumer price index (CPI) basket, reached a multi-month high in April and can remain elevated due to higher vegetable and cooking oil prices globally. RBI mainly considers the retail inflation figure while arriving at its bi-monthly policy decision.
The Reserve Bank has been mandated by the Centre to keep the retail inflation between 2 per cent to 6 per cent.
The elevated price outlook pushed RBI to hike its repo rate for the first time in four years, lifting it by 40 basis points (bps) to 4.40 per cent in an off-cycle meeting earlier this month. Repo rate is the rate at which RBI lends money to commercial banks.
On the global front, U.S. Federal Reserve also increased its interest rate by 50 bps, the highest in 22 years.
Central banks have also indicated future rate hikes to bring down surging inflation.
Another set of government data conveyed that the factory output rose 1.9 per cent in March this year.