Retail inflation in India in April

May 15, 2022

According to the data released by the National Statistical Office (NSO), retail inflation in April is 7.79%. Rural inflation surged to a near 8-year high of 8.38%, whereas urban inflation was at an 18-month high of 7.09%.

What is inflation?

Inflation is the general rise in the prices of goods and services in an economy.

Why April’s retail inflation is worrisome?

Because retail inflation reached an 8-year high and it is the fourth straight month that the retail inflation crossed the Reserve Bank of India’s (RBI’s) inflation target.

What was the previous highest inflation?

The previous highest inflation was 8.33 %, seen in May 2014.

How much is the food price inflation?

The food price inflation (combined for rural and urban) in April 2022 is 8.38%.

Which state witnessed the highest inflation rate?

The highest inflation rate is seen in West Bengal, followed by Madhya Pradesh and Telangana.

How much is the core inflation?

Core inflation in April is 6.97%.

What is core inflation?

Core inflation is the inflation measure that excludes prices of volatile items like food and fuel prices while measuring inflation.

Why did the inflation rate increase in April?

Inflation surged to record high levels due to rising fuel and food prices, especially vegetables, spices, and oils. Russia-Ukraine war, interest rate hikes by the United States Federal Reserve, and supply disruptions caused by COVD-induced lockdowns contributed to the surging inflation.

What are the effects of the increase in the inflation rate?

People’s purchasing power will be reduced. As items become expensive, people reduce consumption. This will reduce overall demand in the economy.

How is retail inflation measured in India?

Retail inflation is measured by the Consumer Price Index (CPI).

What is the Reserve Bank of India’s (RBI’s) inflation target?

Reserve Bank of India (RBI) is mandated by the Central government to maintain the inflation rate at 4%, with a lower tolerance of 2% and upper tolerance of 6%. If inflation breaches the 2%-6% band for three consecutive quarters, it is legally considered the failure of the Reserve Bank of India (RBI).

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