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NEW DELHI: Retail inflation soared to a 17-month high in March led by a sharp increase in prices of food items and hardening of price pressures in other key segments and posing a fresh challenge for policymakers against the backdrop of Russia‘s invasion of Ukraine and the prospect of an increase in interest rates soon.
Data released by the National Statistical Office (NSO) on Tuesday showed retail inflation, as measured by the consumer price index (CPI), neared the 7% mark at 6.95%, higher than the 6.1% recorded in February.
Price pressures have intensified in the economy as supply chains have been disrupted due to war in Ukraine and has made it tough for household budgets. There has been a sharp increase in edible oil prices and other commodities which have piled pressure. The inflation rate is 100 basis points higher than the RBI‘s upper tolerance band of 6%, the third consecutive month it has remained in that region.
Food inflation surged 7.7% during the month from 5.9% in February. Rural inflation was at 7.7% while urban areas recorded annual increase of 6.1%. “We have been pointing out that the health and household goods/ services inflation is turning structural because in the last 15 months health inflation has been in excess of 6% and household goods/ services inflation in excess of 5% in the last 10 months . Going forward, with an increase in cost of essential medicines from April 2022, health inflation is likely to exert further pressure on retail inflation,” said Sinha. The RBI last week had held interest rates steady but raised its inflation forecast to 5.7% for 2022-23.
Separate data showed industrial output growth rose to 1.7% in February compared to a contraction of 3.2% in February last year. It was higher than the 1.3% expansion recorded in January. The manufacturing sector remained sluggish recording a growth of 0.8% compared to a contraction of 3.4% in February last year.
Data released by the National Statistical Office (NSO) on Tuesday showed retail inflation, as measured by the consumer price index (CPI), neared the 7% mark at 6.95%, higher than the 6.1% recorded in February.
Price pressures have intensified in the economy as supply chains have been disrupted due to war in Ukraine and has made it tough for household budgets. There has been a sharp increase in edible oil prices and other commodities which have piled pressure. The inflation rate is 100 basis points higher than the RBI‘s upper tolerance band of 6%, the third consecutive month it has remained in that region.
Food inflation surged 7.7% during the month from 5.9% in February. Rural inflation was at 7.7% while urban areas recorded annual increase of 6.1%. “We have been pointing out that the health and household goods/ services inflation is turning structural because in the last 15 months health inflation has been in excess of 6% and household goods/ services inflation in excess of 5% in the last 10 months . Going forward, with an increase in cost of essential medicines from April 2022, health inflation is likely to exert further pressure on retail inflation,” said Sinha. The RBI last week had held interest rates steady but raised its inflation forecast to 5.7% for 2022-23.
Separate data showed industrial output growth rose to 1.7% in February compared to a contraction of 3.2% in February last year. It was higher than the 1.3% expansion recorded in January. The manufacturing sector remained sluggish recording a growth of 0.8% compared to a contraction of 3.4% in February last year.
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