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India's consumer inflation accelerates to 4.58 percent in April

Reuters  |  BENGALURU 

BENGALURU (Reuters) - India's annual consumer price accelerated in April to 4.58 percent, after easing for three straight months, data from the showed on Monday, mainly driven by faster hikes in fuel prices.

The median forecast in the poll of nearly 30 economists was for April's annual rate of consumer to rise to 4.42 percent from 4.28 percent in the previous month.


"The key drivers of April number were and beverages that have turned positive month-on-month after four months of contraction. Other drivers were related to miscellaneous that has seen across-the-board hardening of led by education, household goods, personal care and fuel commodities such as petrol and diesel.

"Core inflation at 5.9 percent is at a 44-month high. Going forward, we expect the trajectory to move north with international crude prices firming up and likely remaining elevated as also by MSP-led (minimum support price) inflation. We maintain our estimate for FY19 at 4.7 percent with upward bias. The positive support could come only if we have a solid monsoon performance giving a grain output."


"Firmer headline is driven by disinflation in food prices, especially vegetables, together with a sharp rise in domestic fuel prices. Housing is still upheld by remnant rent allowance changes. Hardening core pressures are the dominant takeaway from April's outcome as it ticks towards 5.8 percent-5.9 percent, much to the discomfort of the central

"The of is likely to adopt hawkish commentary in June, highlighting upside risks from MSP (minimum support price) increases and global oil prices, coupled with heightened volatility in the financial markets. Today's outcome validates our expectations that the central is likely to tighten policy in August."


"We continue to expect a pre-emptive rate hike by the at its August policy meeting. Whether the hike will be one-off or followed up by another hike this year would be data-dependent. Nevertheless, chances of two rate hikes in 2018 have increased.

"We remain comfortable with our fiscal year-end average inflation forecast of 5.1 percent. The bias remains on upside risks, largely led by and a stronger cyclical recovery in activity.

"We think RBI would revise its inflation forecast higher. Global growth momentum remains strong despite trade tensions; are edging up on geopolitical risks and domestic demand and investments are in recovery mode.

"Underlying inflation pressures are mainly demand-driven, backed by the ongoing cyclical recovery in consumption and investment. Core inflation would firm up further as the combination of higher commodity prices and improving demand abet labour costs going forward."

(Reporting by in Mumbai, Vishal Sridhar in Bengaluru, Editing by Sherry Jacob-Phillips)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, May 14 2018. 18:01 IST