Wholesale inflation rises to 4-month high of 3.18% in April


India's retail and wholesale inflation rates went up in April on account of high oil prices. CPI inflation was recorded at 4.28 per cent in March and 2.99 in the corresponding period a year ago.

April was the sixth straight month in which inflation was higher than the Reserve Bank of India's medium-term target of 4 percent.

The central bank revised downward forecast for retail inflation to 4.7-5.1 per cent for April-September and 4.4 per cent for October-March.

However, inflation in vegetables segment was lower at 7.29 per cent in April compared to 11.7 per cent.

In the fuel and power category, the price of high speed diesel grew the most, by 13.01%.

Last month, the RBI brought down its January-March (2017-18) inflation projection to 4.5 percent from at 5.1 percent earlier. The government data, on Monday, also highlighted that annual wholesale price inflation (WPI) of last month that accelerated, was facilitated by higher fuel and food product prices. It touched a high of $78 this month.

The inflation data for February was revised upwards to 2.74 per cent from the provisional estimate of 2.48 per cent. Inflation rate for fruits rose sharply to double digits of 19.47 per cent in April from 9.26 per cent in March.

Deflation in vegetables weakened to 0.89 per cent as compared to 2.70 per cent in March.

The hardening of inflation, both retail and wholesale, comes weeks ahead of RBI's Monetary Policy Committee meet on June 4 and 5.

The index for Manufactured Products group rose by 0.3 percent to 116.1 (provisional) from 115.7 (provisional) for the previous month. WPI inflation was at 2.47% in the previous month and 3.85% during the corresponding month of the previous year.

"The global rise in crude oil prices remains a key risk for the inflation trajectory".

"The hike was largely driven by an upswing in core inflation, especially with a broad-based increase in services segment while marginal upside movements were seen in clothing and housing segments as well", Richa Gupta, senior director and senior economist, Deloitte India said in a note.

India Ratings' chief economist Devendra Kumar Pant said housing and rising oil prices are likely to keep pressure on headline inflation in the coming months.