New Delhi:Inflation based on wholesale prices touched a four-month high of 3.18% in April on increasing prices of petrol and diesel as well as fruits and vegetables.
The Wholesale Price Index (WPI) based inflation stood at 2.47% in March and 3.85% in April last year. WPI inflation, which was on a declining trend since December 2017, accelerated in April due to an unfavourable base effect, a seasonal uptick in food prices as well as the pass through of rising global crude oil prices. Inflation in December was 3.58%.
According to government data released today, inflation in food articles was at 0.87% in April 2018, as against a deflation of 0.29% in the preceding month.
Deflation in vegetables was 0.89% in April, while in the previous month it was 2.70%. Inflation in fruits was in double digits at 19.47% in April, up from 9.26% in March.
Inflation in ‘fuel and power’ basket rose sharply to 7.85% in April from 4.70% in March as prices of domestic fuel increased in line with rising global crude oil rates.
In the ‘fuel and power’ basket in WPI, petrol inflation spiked to 9.45% in April from 2.55% in March; while diesel jumped to 13.01% from 6.12% in the previous month.
A global rally in crude prices pushed up domestic fuel prices, with petrol at Rs74.80 per litre and diesel at a record high of Rs66.14 a litre.
ICRA Principal Economist Aditi Nayar said WPI inflation is expected to continue to rise over the remainder of this quarter.
“The government may prefer to wait for additional information about the level at which the monthly GST revenues stabilise after the e-way bill introduction, before reducing excise duty on fuels," she said.
Key factors that would influence the inflation trajectory include the level at which global crude oil prices stabilise and the extent to which they are transmitted to domestic fuel prices, the early trend in the monsoon dispersion and the extent of change in MSPs, Nayar added.
The WPI inflation for February was revised upwards to 2.74% from the provisional estimate of 2.48%. In its first monetary policy review for the fiscal, the Reserve Bank last month maintained status quo on interest rate citing inflationary concerns. RBI mainly takes into account retail inflation data, which is slated to be released later in the day, while formulating monetary policy.
The central bank revised downward forecast for retail inflation to 4.7-5.1% for April-September and 4.4% for October-March.