Retail inflation, as measured by the Consumer Price Index (CPI) has moved up to 10.36% in April 2012 as compared to 9.38% in March. Cost of living has also become more expensive for the urban consumer in April as compared to the rural, as inflation in urban areas surged by 11.10% versus 9.86% in rural (y-o-y).
The major jump in prices came from vegetables that became dearer by a whopping 24.55% in April 2012 as compared to the same month last year. Other commodities that showed a substantial increase were edible oils, which increased by 17.63% followed by milk and products which went up by 14.9% in April 2012, y-o-y basis.
Overall food inflation stood at 10.18% y-o-y. ‘Fuel and light’ as well as ‘clothing bedding and footwear’ also witnessed double digit inflation and increased by 11.4% and 11.95% respectively.
The rising inflation, both the CPI and WPI (7.32% in April), are expected to be a cause of concern for the Reserve Bank of India (RBI) which has been trying to control the spiraling inflation since the last fiscal. Food inflation, in particular has been stubbornly high making the task of rate cuts and hence growth, difficult.
The government of India has recently moved to the practice of reporting the CPI numbers as it feels that they are more representative of the inflationary pressures borne by the common man. However since the Index is still very new, it will be a while before the RBI starts using it as the basis for policy decisions.
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