India’s wholesale price inflation accelerated 7.23% in April,compared with 6.89% in the previous month,as food and manufactured items turned dearer,heaping pressure on the central bank against any dovish approach to monetary easing despite shrinking economic activity.
The government has revised up the inflation figure for February to 7.36% from 6.95% estimated earlier,according to the data released by the industry ministry on Monday.
Prices of food articles rose 10.49% in April,compared with 9.94% the previous month,on soaring rates of vegatables and protein-based edible products,showed the data. Prices of vegetable soared a whopping 60.97%,egg,meat and fish 17.54% and oilseeds 16.66%. Primary articles inflation,with a combined weight of 20.12% in the wholesale price index basket,surged 9.71% in April,compared with 9.62% in the previous month.
Similarly,manufactured products,with a weight of nearly 65%,inched up to 5.12% in the last month from 4.87% in March. Prices of edible oils shot up 11.10%,metals alloys and metal products 10.72% and iron and semis 17.98%. The fuel and power index gained 11.03% in April,compared with 10.41% in the previous month.
Analysts have cautioned about persistent pressure on food prices as supplies of fruits and vegetables often decline in summer. An 8% depreciation of the rupee against the dollar since March 8 has further pressured imports of key items such as crude and vegetable oil.
The reserve Bank Of India (RBI) last month cut the main lending rate by an unexpectedly sharp 50 basis points for the first time in around three years to prop up the economic growth,but warned of limited scope to reduce the rates further citing “upside risks” to inflation. India’s industrial production contracted by 3.5% in April,manufacturing,mining and capital goods output got stymied by more than two years of monetary tightening to ease inflation.
The fresh surge in inflation,which had showed signs of moderation since December after tripping 9% in each of the first 11 months of 2011,has again brought to the fore the difficult trade-off between growth and inflation. As inflation remains central to the RBI’s monetary policy,soaring prices may effectively squeeze scope for any rate cut in near future,said analysts.
The country’s gross domestic product expanded 6.1% in the December quarter and is expected to have missed the official forecast of 6.9% in the fiscal year that ended March 31.