As expected by us, inflation in terms of the consumer price index (CPI) for the month of April 2012 came in double-digits at 10.36 per cent as compared to 9.38 per cent in the month of March 2012.
As expected by us, inflation in terms of the consumer price index (CPI) for the month of April 2012 came in double-digits at 10.36 per cent as compared to 9.38 per cent in the month of March 2012. It has been noted that ever since the first time these numbers were announced in the month of February, the trend has been continuously rising.
When compared to the WPI inflation data for the month of April which stood at 7.23 per cent, the CPI numbers yet again reinforce the crude truth that prices at the consumer level are far higher than those at the wholesaler level. This we believe will continue to pose a grave threat to our macro-economic sanctity.
On a month-on-month basis, both urban and rural articles have increased over their previous month levels with rural CPI inflation reaching close to the double-digit mark. In fact while the prices of vegetables, fruits and protein-based items at the consumer level have continued their rise, the recent data for month of April has also seen a spurt in non-food items like fuel, clothing, etc.
Going forward, with expectations that the monsoon rainfall for the country would be below its normal long period average (LPA), the prices of food items may witness a further upward movement on the back of supply concerns, further threatening India’s inflationary situation.
With hikes in the retail prices of petrol and diesel yet to take effect and expectations of some bad news on this front, any such hike would mean an upward movement in not only the fuel articles’ inflation but also in the primary and manufactured articles as transportation costs spiral upwards.
In conclusion, the latest set of inflation data both in terms of the CPI as well as the WPI is bound to push the Reserve Bank of India into a rather uncomfortable position while it announces its next monetary policy review for the economy. We continue to retain our stance that the RBI will not initiate any further rate cuts in FY13.