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LATEST NEWS UPDATES | Retail inflation hits double digits in April

Retail inflation hits double digits in April

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published Published on May 19, 2012   modified Modified on May 19, 2012

-The Times of India

Spiralling prices of vegetables, oils and fats, milk and milk products pushed consumer price inflation to double digits in April in yet another hurdle to the Reserve Bank of India's efforts to ease interest rates.

The double digit retail inflation rate also poses fresh challenges for the UPA government which has been on the back foot for its handling of the economy.

Data released by the Central Statistics Office on Friday showed annual inflation rate based on all India general CPI (combined) for April on point-to-point basis (April 2012 over April 2011) at 10.36% as compared to 9.38% for March.

The inflation rates for rural and urban areas for April stood at 9.86% and 11.10% while the final inflation rates for rural and urban areas for March are 8.70% and 10.30% respectively, the statistics office said in a statement.

The data showed oils and fats prices rose an annual 17.63% in April across the country while in urban areas, it rose 19.73% year-on-year. In rural areas, prices of oils and fats rose an annual 16.65%.

Vegetable prices shot up an annual 24.55% in April. In urban areas, they rose 32.43% year-on-year while in rural areas, vegetable prices rose 21.27% year-on-year.

Milk and milk product prices rose an annual 14.94% in April across the country while in urban areas, they rose 13.85% and in rural areas an annual 15.70%.

The latest data confirms the price pressures prevalent in Asia's third-largest economy which would make the RBI's task of easing interest rates difficult. The central bank takes into account all available data on inflation among other numbers when it finalizes its views on rates.

Economists said the April CPI data showed that price pressure was largely limited to vegetables and food, almost similar to the wholesale price index data.

"Although the headline creates an impression that inflation has picked up, the details show that it is limited to vegetables and food and not generalized," said Samiran Chakraborty, regional economist at Standard Chartered Bank.

"The RBI will have to be more nuanced in looking at the inflation numbers. The details will be as important as the headline," Chakraborty said.

The more widely-watched inflation data, based on the wholesale price index, also showed that food inflation had hit double digits in April while the overall inflation also showed signs of firming up. Food inflation remained stubborn during the month. According to the monthly WPI data, food inflation shot up an annual 10.49% in April compared to the previous month's 9.94% increase. This was the first time in six months that food inflation had touched the double digit mark.

The spike in vegetable prices is often seasonal but in case of protein-rich items, supply has failed to keep pace with demand. Higher disposable incomes and change in dietary habits have fuelled demand for protein rich items such as milk, meat, eggs and fish. Experts have called for raising productivity and easing supply side bottlenecks to soften inflationary pressures but so far it has had minimal impact.


The Times of India, 18 May, 2012, http://timesofindia.indiatimes.com/business/india-business/Retail-inflation-hits-double-digits-in-April/articleshow/13276631.cms


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