Government data on Thursday showed that driven by rising fuel and food prices, India's retail inflation surged to 7.79 per cent in April. For a fourth consecutive month, the consumer price-based inflation figure stayed well above Reserve Bank of India's (RBI's) upper tolerance limit. The centre has mandated the RBI to keep the retail inflation between 2 per cent to 6 per cent.
The retail inflation stood at 6.95 per cent in March this year.
Accounting for nearly half the consumer price index (CPI) basket, the food inflation surged to a multi-month high in April. It is expected to remain high due to higher vegetable and cooking oil prices globally. The central bank mainly considers the retail inflation figure while arriving at its bi-monthly policy decision.
Because of the elevated price outlook, the RBI was forced to hike its repo rate for the first time in four years. The central bank lifted the repo rate by by 40 basis points (bps) to 4.40 per cent in an off-cycle meeting earlier this month. Repo rate is the rate at which the RBI lends money to commercial banks.