Published: Tue, May 15, 2018
Finance | By Loren Pratt

Retail inflation accelerates to 4.58% in April

Retail inflation accelerates to 4.58% in April

The Wholesale Price Index (WPI) based inflation stood at 2.47 per cent in March and 3.85 per cent in April past year. According to the Commerce Ministry data, the WPI inflation in April 2017 was at 3.85 per cent. Last month, the RBI in its first monetary policy review for this fiscal had maintained status quo on policy rate citing inflationary concerns. It said deflation in vegetables was 0.89 per cent in April, while in the previous month it was 2.70 per cent.

The rate of inflation based on WPI Food Index consisting of Food Articles from Primary Articles group and Food Product from Manufactured Products group increased from (-) 0.07 per cent in March 2018 to 0.67 per cent in April 2018.

Annual consumer price inflation (CPI) accelerated to 4.58 per cent in April, the government data showed on Monday. March's data is an indication that prices at a relatively safe distance from the apex bank's upper tolerance level of inflation at 6 percent.

However, last month's rise in WPI (Wholesale Price Index) inflation rate was slower on a year-on-year (YoY) basis. Petrol prices increased by 9.45% over April past year, while liquefied petroleum gas became cheaper by 11.73%. However, the price of manufacture of cordage, rope, twine and netting, woollen yarn and made-up textile articles (1 per cent each) declined.

"We expect the trajectory to move north with global crude prices firming up and likely remaining elevated as also by MSP-led food inflation.for FY 19 (2018-19) at 4.7 per cent with upward bias". The biggest risk that Asia's third-largest economy faces is rising crude oil prices, which hit $78 a barrel last week, their highest since November 2014 following prospects of new US sanctions on Iran. Prices of high-speed diesel rose twice as fast at 13 per cent and petrol prices rose by 9.45 per cent, up from the 2.55 per cent rise seen in March. However, inflation in vegetables segment was lower at 7.29% in April compared to 11.7%.Overall, inflation in the food basket remained flat at 2.8% month-on-month.

"The hike was largely driven by an upswing in core inflation, especially with a broad-based increase in services segment while marginal upside movements were seen in clothing and housing segments as well", Richa Gupta, senior director and senior economist, Deloitte India said in a note.

India's annual wholesale price inflation picked up in October to a six.

ICRA's principal economist Aditi Nayar said WPI inflation is expected to continue to rise over the remainder of this quarter.

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