By Manoj Kumar and Aftab Ahmed
NEW DELHI, May 12 (Reuters) – Rising food and energy prices pushed India’s annual retail inflation up towards an eight-year high in April, strengthening economists’ view that the central bank would have to raise interest rates more aggressively to curb prices.
Consumer price index-based inflation CPIY=ECI rose more than expected to 7.79% in April year-on-year, remaining above the Reserve Bank of India’s (RBI) tolerance band of 6% for a fourth month in a row, data released by National Statistics Office showed on Thursday.
April’s print was higher than 6.95% in the previous month and 4.23% a year ago. Analysts had forecast retail inflation at 7.5%, according to a Reuters poll.
RBI’s monetary policy committee (MPC), which raised the key repo rate (INREPO=ECI> by 40 basis points to 4.40% in an emergency meeting earlier this month, will consider more interest rate hikes at its June meeting, a source familiar with the matter told reporters on Wednesday.nL2N2X30U5
The next meeting of RBI’s MPC is scheduled for June 6-8.
Economists said rising food prices were an overriding worry for consumers – already hit hard during two years of the pandemic – as prices of edible oil and vegetables have surged amid fears of a fall in wheat output this year.
India’s annual retail headline inflation was at 8.33% in May 2014 when Prime Minister Narendra Modi took charge, while promising to bring down prices.
Prices of food items, which make up nearly half of the consumer price index (CPI), rose 8.38% year-on-year in April, compared with 7.68% a month earlier, pushed by rise in edible oil and vegetable prices.
A near 4% rupee depreciation against dollar this year has also made imported items costlier.
(Reporting by Manoj Kumar and Aftab Ahmed
Editing by Raissa Kasolowsky and Bernadette Baum)
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