Although retail prices stayed largely cool, inflation at the wholesale level ran hot last month in a sign that supply shortages caused by the war in West Asia have started to feed price pressures.
The wholesale inflation rate for April more than doubled to 8.3% from a year earlier, compared to 3.9% in March, according to government data issued on Thursday.
April’s reading was the highest in three-and-a-half years. Prices of crude petroleum and natural gas were up 67.2% from a year earlier, while the fuel and power inflation rate surged to 24.7% in April from almost 1.1% in March. Manufactured products also saw their inflation rise to 4.6% from 3.4%.
On the whole, it is clear that higher input costs are driving up factory-gate prices. Consumers at large haven’t yet felt the heat partly because of the primacy of food in the consumer goods basket and the government’s cap on fuel prices that’s looking less tenable by the day.
As inflationary pressures get generalized and the Centre is left with no option but to let fuel prices rise, retail inflation will take a sharper incline. In other words, the central bank’s inflation-targeting credentials will be tested once again. How severely is the only question.