New Delhi: Retail inflation in India most likely soared to an 18-month high in April, which is well above the Reserve Bank of India (RBI’s) upper tolerance limit for a fourth consecutive month, according to a report by Reuters.
The rate of retail inflation surged largely because of rising fuel and food prices amid the ongoing Russia-Ukraine war, which has sent tremors across the global economy.
Prices of crude oil soared globally since Russia’s invasion of Ukraine in mid-February, while supply of commodities, mostly coal and oil, got disrupted due to the war.
Inflation in the food basket that accounts for nearly half the consumer price index (CPI) reached a multi-month high in March and most likely to remain elevated due to higher vegetable and cooking oil prices.
According to a May 5-9 Reuters poll of 45 economists, all these factors have pushed inflation in India to 7.5 per cent on an annual basis in April from 6.95 per cent in March. And that would be the highest inflation rate since October 2020 and well above the RBI's upper 6 per cent limit.
Forecasts for the data, which will be released on May 12, ranged between 7.0 per cent and 7.85 per cent.
Shilan Shah, senior India economist at Capital Economics, “CPI inflation appears to have surged higher still in April on the back of higher food and fuel prices. The bulk of the impact of the recent fuel prices hikes will be felt in April. We wouldn't be surprised if core inflation has risen too. The risk is that sustained higher inflation drives up inflation expectations, which push core inflation even higher.”
With the rupee hitting a new low on Monday, India, the largest importer of crude oil, has also been subject to upwards pressure.
Wholesale price inflation was predicted at 14.48 per cent, continuing its double-digit streak for a year.