Bikky Khosla | 15 May, 2018
government came out with inflation
figures for April
on Monday, and while the recent data sets on manufacturing and
services sector output had come as a relief, the latest inflation
figures, both retail and wholesale, came as a dampener, raising
question whether now the debate within the
Monetary Policy Committee of
the Reserve Bank of India
will shift from
‘hold versus cut’ to ‘hold versus raise’. During
the last few months, inflation
seemed to be under
but now it seems the
relief was only temporary.
to data furnished by the
Ministry of Statistics and Programme Implementation, retail inflation
rose to 4.58 per cent in April from a rise of 4.28 per cent in March
and 2.99 per cent in the corresponding period of the previous year.
in prices of cereals, meat, fish and fruits played
a key role in building up of this price pressure. It is also
noticeable that with this rise in April, retail inflation reversed a
declining trend of three months since January.
have a look at
the wholesale inflation data.
It jumped to a four-month high of 3.18 per cent in April from
a rise of 2.47 per cent in the previous month. An
exponential rise in food and fuel prices drove this spike. Food
prices edged up by 0.87 per cent from a deceleration of (-) 0.29 per
cent reported for March while cost of fuel and power increased at a
fast pace of 7.85 per cent during the month, from a growth of 4.70
per cent in March. Fuel-wise, petrol inflation spiked to 9.45 per
cent and diesel
to 13.01 per cent.
the US sanctions on Iran has
catapulted crude oil price in the global market, and
India, needless to say, is among
the most-vulnerable economies to this
to these woes,
the Indian Rupee, which on Monday ended
at a fresh 16-month low of 67.51 against the US currency, is also
embattling. So, now the inflation figures further
complicate the situation, presenting
a difficult dilemma for RBI in terms of holding rates to support
growth and rising rates to fight
against inflation and defend
the currency against major swings.