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India April wholesale prices rise at fastest pace in a year

15-05-2024

Bureau Report + Agencies

NEW DELHI: India’s wholesale price-based inflation (INWPI=ECI), opens new tab rose 1.26% in April, the highest pace in a year, mainly driven by food and primary articles, government data showed on Tuesday.

The April figures were higher than the 1% rise expected by economists polled by Reuters and up from a 0.53% year-on-year rise in March.

Wholesale inflation was the highest since March 2023, when it hit 1.41%.

Food prices rose 5.52% on-year compared with an increase of 4.65% in March, while prices of primary articles were up 5.01% against a 4.51% rise in the previous month.

Manufactured product prices fell 0.42% against a 0.85% drop in the previous month. Fuel and power prices rose 1.38% compared with a 0.77% drop in March.

The inflation was driven by higher crude oil and food prices, said Paras Jasrai, an economist at India Ratings.

Inflation should quicken further in May, largely due to a favorable base and some pickup in global commodity prices, said Jasrai.

Annual retail inflation rate eased slightly in April, partly due to lower fuel prices, although food prices remained elevated, government data showed on Monday.

The central bank held interest rates steady in April as growth was seen staying robust while inflation has remained above its 4% target. Markets now expect a rate cut only in early 2025 as opposed to earlier views for an easing in the last quarter of 2024.

India’s retail inflation rate eased slightly in April, partly due to lower fuel prices, although food prices remained elevated, government data showed on Monday.

Annual retail inflation (INCPIY=ECI), opens new tab in April was 4.83%, down from 4.85% in March. Economists polled by Reuters had forecast April retail inflation at 4.80%.

Food inflation, which accounts for nearly half of the overall consumer price basket, rose 8.70% in April, compared with an 8.52% rise in the previous month. Food inflation has been accelerating at more than 8% year-on-year since November 2023.

Food inflation, which accounts for nearly half of the overall consumer price basket, rose 8.70% in April, compared with an 8.52% rise in the previous month. Food inflation has been accelerating at more than 8% year-on-year since November 2023.

The inflation rate for cereals was 8.63%, compared with 8.37% in the previous month and pulses rose 16.84%, compared with 17.71% in March. Vegetable prices rose 27.8% in the month of April.

With parts of the country experiencing a heatwave, food prices continue to pose an additional risk to India’s inflation trajectory, according to the latest Reserve Bank of India (RBI) bulletin.

“The anticipated threat from a severe heatwave has so far not played out in a disruptive manner, food price pressures need to be on close watch due to their inherent volatility,” said Vivek Kumar, economist at QuantEco Research.

In April, fuel and power prices fell 4.24% compared with a fall of 3.24% in the previous month. Core inflation, which strips out volatile food and energy prices, is estimated at 3.23% in April, compared with 3.3%-3.4% in March, according to two economists.

The Indian government does not release core inflation figures.

Even though core inflation has been benign, the RBI kept its key interest rate steady for the seventh straight policy meeting last month, as it wants inflation to fall to 4% on a durable basis before cutting rates.

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