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MUMBAI (Reuters) – India’s annual consumer price inflation accelerated to a stronger-than-expected 5.39 percent in April from 4.83 percent the previous month, government data showed on Thursday.
Meanwhile, food inflation picked up to 6.32 percent in April from 5.21 percent in March, the data showed.
Separately, data showed India’s industrial output edged up 0.1 percent in March from a year earlier, well below forecasts for 2.5 percent growth.
COMMENTARY
MADHAVI ARORA, CHIEF ECONOMIST, KOTAK MAHINDRA BANK
“Both the numbers have disappointed the market and us.
“We were not looking for a sharp uptake in protein goods specifically because generally during this part of the year, historically, on a seasonal basis, we have not seen such a high sequential increase, probably partly owing to Navratri (festival) when meat consumption is on the lower side.
“We were anyway looking at an upsurge in vegetables and fruits, but this was something which was not anticipated from our end at least.
“I think given that the next month also looks to be ominous, it would definitely put upside pressure to the CPI trajectory in the immediate run.”
SHUBHADA RAO, CHIEF ECONOMIST, YES BANK, MUMBAI
“RBI would have been anticipating these price pressures as was indicated in the policy statement.”
“We were anticipating price pressures in food, paan tabacco and miscellaneous, and that also has driven core up to 4.94 percent.
“We expect another month or two of firming up of prices. It would be therefore be very critical to make assessment of the monsoon arrival and its performance thereafter.
“We definitely have pencilled in a rate cut of 25 bps in the first half. We have not been driven to change our call for June rate cut because these numbers could well be in the realm of possibility for RBI.
“The critical game-changer would be monsoon. If it’s delayed or there is further downward revision, then it spells bad news for the scope of a rate cut.”
ABHISHEK UPADHYAY, ECONOMIST, ICICI SECURITIES PRIMARY DEALERSHIP LIMITED, MUMBAI
“Inflation is higher than expected on account of higher food prices. Perishables and protein inflation surprised. Moderate increase in core inflation was largely expected.
The data “does not alter our assumption of a prolonged pause from the RBI in terms of policy rate fixings. The focus is likely to be on improving banking system liquidity rather than pruning policy rates more, given the limited expected downside in inflation.”
RUPA REGE NITSURE, GROUP CHIEF ECONOMIST, L&T FINANCE HOLDINGS, MUMBAI
“In the month of April, we had seen a spike in sensitive commodity prices, such as vegetable prices, sugar, pulses and edible oil, and the statistical base was also unfavourable.
“That only shows how challenging it is going to be for RBI to see inflation coming down on a sustained basis. As I have been maintaining, until 2016-end RBI may not cut do any policy easing. They will focus more on liquidity easing and transmission rather than reducing policy rates.”
(Reporting by Neha Dasgupta; Compiled by Rafael Nam)
