India’s headline inflation accelerated in April, dashing hopes of further rate cuts by the Reserve Bank to spur growth. Inflation, as measured by the wholesale price index, rose to 7.23% in April from a year ago, compared with 6.89% in March, the commerce ministry said. The ministry also raised the inflation reading for February to 7.36% from 6.95% reported earlier. The uptick in April was mainly driven by soaring prices of vegetables, which prompted Finance Minister Pranab Mukherjee to term it a ‘concern’.
Food inflation, which makes up 14.33% of the wholesale price index, touched a 13-month high at 10.5% in April. It was led by a 26.3% spurt in vegetable prices during the month. Vegetable prices rose 61% in the month from a year ago. Within the food basket, inflation in the category of eggs, meat and fish was 17.54%, while inflation in milk prices stood at 15.51%.
Excluding vegetables, food inflation seemed benign, dropping to 5.2% in April from 6% in March. Inflation in manufactured products, which comprises 64.97% of the overall index, rose to 5.12% from 4.87% in March.
Fuel inflation increased to 11.03% from 10.41% a year ago.
Economists said despite the rise, inflation was not worrying.
Core inflation, which excludes food and fuel inflation, inched up in the month to 4.9% from 4.7% in March, largely because of a rise in prices triggered by higher excise duty imposed in the budget. Core inflation is considered a good indicator of demand pressures in the economy.
An 8% depreciation in the rupee since March also added to the input price pressure.
Experts, however, said the rise in inflation has limited the room for RBI to cut interest rates further. The bank had cut the repo rate by 50 basis points on April 16. Policymakers agreed that a rate cut seemed more unlikely.
Benchmark bond yields on Monday remained largely flat, although stock indices dropped on weak global cues.
No comments:
Post a Comment