Inflation rises to 7.23 pc in Apr; vegetable prices shoot up

Inflation moved up to 7.23 percent in April on account of spurt in prices of vegetables, meat, milk and pulses, although onion and fruits showed a declining trend. Inflation, as measured by the Wholesale Price Index (WPI), was 6.89 percent in March. In April last year, it was 9.74 percent. Vegetables turned costlier by 60.97 percent during April. In March, the rate of price rise in vegetables was 30.57 percent. Pulses were expensive 11.29 percent. Milk became costlier by 15.51 percent, while rice and cereals turned costlier by 5.68 percent and 5.8 percent respectively. Prices of potato too rose by 53.44 percent. Besides, eggs, meat and fish prices rose 17.54 percent during the month, slightly lower from 17.71 percent in March. However, as per the official data released on Monday, inflation for the overall food items category was 10.49 percent in April, as against 10.66 percent in March. Onion prices declined (-)12.11 percent in April. The rate of decline was (-)24.23 percent in March. Food articles have 14.3 percent share in the WPI basket. Inflation in the price of manufactured goods increased marginally to 5.12 percent in April, from 4.87 percent in March. The headline inflation number for February was revised upwards to 7.39 percent, from the provisional estimate of 6.95 percent. Inflation in overall primary articles inched up to 9.71 percent in April, from 9.62 percent in March. On year-on-year basis, among manufactured items, iron grew dearer by 17.98 percent while edible oil prices rose by 11.10 percent. Inflation in tobacco products and basic metals was 9.48 percent and 10.72 percent respectively. Non-food primary articles, which include fibres and oilseeds increased slightly by 1.61 percent in April. In March, it was (-)1.2 percent. Inflation in the fuel and power segment was 11.03 percent on an annual basis. The rate of price rise was 10.41 percent in the previous month. Experts said the inflationary pressure, driven by prices of food articles, will keep the pressure on the government to remove supply side bottlenecks. Overall inflation hovered at double digit for most of 2010 and 2011. The Reserve Bank hiked key policy rates 13 times, totalling 350 basis points, between March 2010 and October 2011 to tame inflation. Since January, RBI has resorted to injecting liquidity into the financial system, by reducing Cash Reserve Ratio for banks. Besides, it has called for fiscal steps by the government to combat inflation. However, in its annual monetary policy last month, RBI cut key lending rate by 50 basis points to lower borrowing costs amid falling industrial and economic growth. RBI has projected inflation to be around 6.5 percent by March 2013, with a caution that it will remain sticky and there is need to arrest the decline in economic growth.