Retail inflation rises to 7.79%, highest in nearly 8 years

New government data showed that India’s retail inflation has grown to 7.79% in April. The inflation is mainly driven by the rising fuel and food prices.

The Reserve Bank of India (RBI) has been mandated by the Centre to keep the retail inflation between 2 per cent to 6 per cent, but the inflation figure has been well above the directed figure for four consecutive months.

In March, retail inflation stood at 6.95%.

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Food inflation reached a significant high in April due to higher vegetable and cooking oil prices globally. This figure accounts for nearly half of the consumer price index (CPI) basket.

RBI mainly considers the retail inflation figure while arriving at its bi-monthly policy decision.

NDTV reported that the surging prices pushed RBI to hike its repo rate for the first time in four years, lifting it by 40 basis points (bps) to 4.40% in an off-cycle meeting earlier this month. Repo rate is the rate at which RBI lends money to commercial banks.

On the global front, the US Federal Reserve also increased its interest rate by 50 bps, the highest in 22 years.

Central banks have also indicated future rate hikes to bring down surging inflation.

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