Inflation rises to 7.23% in April, vegetable prices shoot up

Inflation mainly driven by higher food prices and manufactured items

Inflation moved up to 7.23% in April on account of spurt in prices of vegetables, meat, milk and pulses, although onion and fruits showed a declining trend.

Inflation, as measured by the Wholesale Price Index (WPI), was 6.89% in March. In April last year, it was 9.74%.

Vegetables turned costlier by 60.97% during April. In March, the rate of price rise in vegetables was 30.57%. Pulses were expensive 11.29%.

Milk became costlier by 15.51%, while rice and cereals turned costlier by 5.68% and 5.8% respectively. Prices of potato too rose by 53.44%.

Besides, eggs, meat and fish prices rose 17.54% during the month, slightly lower from 17.71% in March.

However, as per the official data released today, inflation for the overall food items category was 10.49% in April, as against 10.66% in March.

Onion prices declined (-)12.11% in April. The rate of decline was (-)24.23% in March.

Food articles have 14.3% share in the WPI basket.

Inflation in the price of manufactured goods increased marginally to 5.12% in April, from 4.87% in March.

The headline inflation number for February was revised upwards to 7.39%, from the provisional estimate of 6.95%.

 

Inflation in overall primary articles inched up to 9.71% in April, from 9.62% in March.

On year-on-year basis, among manufactured items, iron grew dearer by 17.98% while edible oil prices rose by 11.10%. Inflation in tobacco products and basic metals was 9.48% and 10.72% respectively.

Non-food primary articles, which include fibres and oilseeds increased slightly by 1.61% in April. In March, it was (-)1.2%.

Inflation in the fuel and power segment was 11.03% on an annual basis. The rate of price rise was 10.41% in the previous month.

Experts said the inflationary pressure, driven by prices of food articles, will keep the pressure on the government to remove supply side bottlenecks.

Overall inflation hovered at double digit for most of 2010 and 2011. The Reserve Bank hiked key policy rates 13 times, totalling 350 basis points, between March 2010 and October 2011 to tame inflation.

Since January, RBI has resorted to injecting liquidity into the financial system, by reducing Cash Reserve Ratio for banks. Besides, it has called for fiscal steps by the government to combat inflation.

However, in its annual monetary policy last month, RBI cut key lending rate by 50 basis points to lower borrowing costs amid falling industrial and economic growth.

RBI has projected inflation to be around 6.5% by March 2013, with a caution that it will remain sticky and there is need to arrest the decline in economic growth.