Retail inflation worsens to 3.48% in April; tomato, gold jewellery prices surge

India’s retail inflation based on the Consumer Price Index (CPI) rose marginally to 3.48 per cent in April from 3.40 per cent in the previous month, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Tuesday, May 12. Food inflation also moved up to 4.20 per cent during the month as prices of tomatoes, cauliflower and precious jewellery remained elevated.

Despite the increase, headline inflation stayed within the Reserve Bank of India’s tolerance band of 2-6 per cent.

Rural inflation stood at 3.74 per cent, higher than urban inflation at 3.16 per cent. The combined CPI index increased to 105.12 in April from 104.84 in March. Food inflation in rural areas was recorded at 4.26 per cent, compared with 4.10 per cent in urban regions.

Tomato, jewellery prices see sharp rise

Among the key items witnessing the highest inflation, silver jewellery prices surged 144.34 per cent year-on-year in April. Gold, diamond and platinum jewellery prices also jumped 40.72 per cent.

Tomato prices rose 35.28 per cent year-on-year in April, while cauliflower inflation stood at 25.58 per cent. Coconut copra inflation was recorded at 44.55 per cent.

The sharp rise in jewellery and personal effects prices pushed inflation in the ‘personal care, social protection and miscellaneous goods and services’ category to 17.66 per cent, making it one of the highest-inflation segments in April.

Potato, onion prices remain lower

Some food items continued to remain in deflation territory. Potato prices fell 23.69 per cent year-on-year in April, while onion prices declined 17.67 per cent.

Motor car and jeep prices also remained weak, registering a 7.12 per cent decline. Air-conditioner prices dropped 5.06 per cent.

At the category level, inflation in ‘Food and beverages’ stood at 4.01 per cent, while transport inflation remained nearly flat at minus 0.01 per cent.

Telangana records highest inflation among states

Among major states, Telangana recorded the highest combined inflation rate at 5.81 per cent in April. Puducherry followed at 4.41 per cent, while Andhra Pradesh reported 4.20 per cent inflation.

Delhi recorded one of the lowest inflation readings at 1.96 per cent. Uttar Pradesh registered inflation of 3.59 per cent, while Maharashtra recorded 3.13 per cent.

The latest inflation data comes ahead of the Reserve Bank of India’s next monetary policy review. Retail inflation has remained below the RBI’s upper tolerance limit in recent months, aided partly by lower prices of items such as potato and onion.

No pressure visible yet: BofA Securities

Noting that inflationary pressure is not visible yet, brokerage BofA Securities said it continues to expect a cumulative hike of 50 basis points in benchmark interest rates starting December.

It also mentioned that minutes of the RBI's April policy review, released on April 22, echoed a cautious tone.

At the bi-monthly review, the RBI governor-led Monetary Policy Committee kept the repo rate ​unchanged on Wednesday while cautioning against lower growth and higher inflation in light of the Middle East crisis.

Many financial experts have warned that the West Asia war could raise inflationary risks for India, mainly via higher energy, fertiliser and logistics costs.

India meets about 90 per cent of its oil requirement through imports.