Retail inflation in India in April was 7.79%, the highest in eight years.

Retail inflation in India, increased by 6.95% in March compared to 6.07% in February. Recent price surges are higher than most analysts expected.

Retail inflation in India, in April, hit a nearly eight-year high of 7.79%, beating the RBI’s inflation target for the fourth straight month, data released by the National Statistical Office (NSO) on Thursday showed.

High levels of fuel and food prices, particularly vegetables, spices, oils/ fats and housekeeping services, contributed to the sharp rise in inflation, which is considered in part to outpace last week’s unplanned RBI rise of 40bps.

Food price inflation (rural and urban combined) reached a 17-month high of 8.38% in April from 7.68% in March. In April, rural inflation hit 8.38%, the highest in eight years, and urban inflation hit an 18-month high of 7.09%. The previous high for headline retail inflation in India was recorded at 8.33% in May 2014.

Rising consumer prices have increased the cost of living for the average Indian, paying higher prices for a variety of commodities, from fuel, electronics and transportation to basic food.

Households have cut back on everyday necessities, from toothpaste to soap, as sales at India’s largest consumer goods company slowed due to declining demand.

Retail inflation rose 6.95% in March, versus 6.07% in February. The recent price surge was higher than most analysts expected.

The government collects retail price data from 1,114 city markets and 1,181 villages in every state to measure retail inflation, which directly affects people’s incomes and economic growth.

Why Retail inflation in India is increasing here are some reasons:-

Rising food prices have a greater impact on poor families, as most of their monthly budget is spent on food. Grain rose 5.96%, according to revised government estimates, as the heatwave in March reduced wheat production by at least 5.7%, from 111 million tonnes in February to 105 million tonnes.

The Russian invasion of Ukraine and the abandonment of monetary easing by the US Fed have had an impact on domestic prices in India.

Fat and oil inflation soared to 17.28% due to the Black Sea conflict and Indonesia’s ban on exports of palm oil for cooking. India meets two-thirds of its cooking oil needs through imports. Vegetable prices rose 15.41% year-over-year from 11.64% in the previous month, while protein fell to 6.97% from 9.6% in March.

The Indian rupee hit an all-time low on Thursday as global turmoil fueled fears of a surge in inflation. A fall in the rupee increases inflation, making imports more expensive, which is likely to put more pressure on central banks to stop the currency from falling.

The rupee fell 0.5% to 77.6313 per dollar on Thursday. This is the second new record in a week. Since then, the rupee has risen slightly as the central bank has taken some action. Shares also fell as the benchmark Sensex index fell 1.8%, a two-month low.

RBI increased the repo rate by 40 basis points last week to 4.49%. The repo rate is the rate at which commercial banks borrow money by selling securities to the reserve bank, while the reverse repo rate is the rate at which the central bank borrows money.

These rates are important to boost credit and business investment in the economy as India pushes ahead with its initial economic recovery.

Cost Inflation Index – Income Tax Department

Also read: RBI raises interest rate by 40 basis points to 4.40% for the first time since May 2020; Borrowing is now expensive