Consumer price index (CPI)-based inflation rose to 10.36 per cent in April, against 9.47 per cent in March, primarily due to the rising prices of vegetables. The CPI inflation number was much higher than the wholesale price index (WPI)-based inflation of 7.23 per cent for April.
It is the urban population that is bearing the brunt of the high prices. At 11.1 per cent, CPI-based inflation was higher in urban areas, compared to 9.86 per cent in rural ones.
Economists said if the trend of rising inflation and declining industrial growth numbers continues, the Reserve Bank of India (RBI) would be faced with the difficult choice of controlling inflation or spurring growth.
The high CPI inflation was also reflective of the higher weightage of food items in the index, compared to the WPI, though food inflation, as measured by the WPI, stood at 10.49 per cent in April. Inflation for clothing, bedding and fuel were also double-digit figures, though these saw a decline compared to March.
Food inflation rose to 10.18 per cent, mainly due to a 24.55 per cent price rise in vegetables. Urban areas recorded food inflation of 10.69 per cent and vegetable inflation of 32.43 per cent, higher than 9.87 per cent and 21.27 per cent in rural areas, respectively. Vegetable inflation in urban areas had rocketed from 4.27 per cent in February to 16.58 per cent in March.
The rise in CPI inflation, however, was not unexpected, especially after the WPI numbers were released earlier, said Sidhharth Shankar, director with financial services firm KASSA. “I think RBI would not be much concerned about this number, as the inflation is food-driven. But it would not reduce rates anytime soon, though it may consider infusing temporary liquidity into the system,” he said.
Milk, fruit, sugar and spices recorded higher inflation in rural areas, compared to urban ones. All-India inflation for fruit was 2.76 per cent, while rural areas recorded 4.55 per cent inflation and urban ones saw prices rise a mere 0.45 per cent.
Milk saw all-India inflation of 14.94 per cent, 15.7 per cent in rural areas and 13.85 per cent in urban ones.
Icra economist Aditi Nayar said, “This data reinforces our view that the scope for further monetary easing is limited, as RBI would remain concerned about a spike in inflationary expectations and the impact of the weaker rupee.”
