The common man has suffered a setback on the inflation front in April. Inflation has reached an 8-year peak due to rising oil prices from food items. According to government data released on Thursday, the Consumer Price Index (CPI) based retail inflation rose to 7.79% in April. Inflation in May 2014 was 8.32%.
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Inflation exceeds RBI's limit for the fourth consecutive month
This is the fourth consecutive month that the inflation rate has crossed the RBI's upper limit of 6%. Retail inflation was recorded at 6.07% in February 2022, 6.01% in January and 6.95% in March. Retail inflation stood at 4.23% in April 2021 from a year ago.
Recently, the Reserve Bank, after its first monetary policy meeting of this financial year, raised the inflation forecast to 6.3% in the first quarter, 5% in the second, 5.4% in the third and 5.1% in the fourth. After this, in the Emergency Monetary Policy meeting, it was decided to increase the interest rates by 0.40% due to inflation concerns.
What is CPI?
Many economies around the world consider the WPI (Wholesale Price Index) as their basis for measuring inflation. This does not happen in India. In our country, along with WPI, CPI is also considered as a scale to check inflation.
The Reserve Bank of India considers retail inflation as the main standard, not wholesale prices, for setting monetary and credit related policies. WPI and CPI interact with each other in the nature of the economy. In this way the WPI will increase, so the CPI will also increase.
How is the rate of retail inflation determined?
Apart from crude oil, commodity prices, manufacturing costs, there are many other things that play an important role in determining the rate of retail inflation. There are about 299 items, on the basis of whose prices the rate of retail inflation is decided.
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