Inflation Shocker: As CPI inflation hits 8-year high

 

Inflation Shocker: As CPI inflation hits 8-year high, experts say brace for rapid RBI rate hikes

Analysts said this indicates the spectre of a generalisation of inflationary pressures which has seeped into everyday needs, adding that inflation is expected to remain above RBI’s upper limit threshold of 6 per cent for the most part of this year.

Consumer Price Index (CPI) inflation in April accelerated to 7.8 per cent, the highest level in eight years, and higher than analyst expectations, driven by higher prices of essential food items (such as cereals, fruits, and milk) and motor and cooking fuel. Analysts said this indicates the spectre of a generalisation of inflationary pressures which has seeped into everyday needs, adding that inflation is expected to remain above RBI’s upper limit threshold of 6 per cent for the most part of this year. Experts expect the latest reading to put pressure on the Reserve Bank of India to further raise rates as much as 50 basis points (bps) in the upcoming June monetary policy (MPC) meeting.

‘Inflation may remain above RBI’s target band for three quarters marking first official ‘failure’ of monetary framework’: Rahul Bajoria, Chief India Economist, Barclays.