Higher food prices drive April retail inflation to 3.5%

NEW DELHI: Retail inflation, based on consumer price index (CPI), inched up for the third consecutive month to 3.5% in April from 3.4% in March on account of acceleration in food prices, data released by NSO showed Tuesday. The food index rose 4.2% in April, above 3.9% in the preceding month.

Fuel inflation decelerated sharply to 0.7% from 1.7% despite the conflict in West Asia persisting.

Core inflation, after stripping out food and fuel, has remained below 4%. Data showed that "personal care, social protection and miscellaneous goods and services" inflation decelerated to 17.7% from 18.6%, led by slight deceleration in gold and silver prices and personal care.

"Core inflation also rose only modestly, suggesting that manufacturers across sectors such as plastics, pharmaceuticals, and personal care products continue to absorb a significant part of the increase in input costs," said Debopam Chaudhuri, chief economist at Piramal Finance.

Restaurant services saw sharp acceleration in inflation to 4.2% from 2.9% during this period. "This was a fallout of higher LPG prices for these establishments which led to higher prices being charged," said Bank of Baroda chief economist Madan Sabnavis.

Prices in rural areas rose at a sharper pace (3.7%) compared to urban areas (3.2%).

Data showed that there was decrease in prices of consumer durables such as cars (down 7.1%) and air conditioners (5.1% lower).

Upasna Bhardwaj, chief economist at Kotak Mahindra Bank, said that though the April inflation reading came in softer than expectation, the outlook remains clouded with upside risks.

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