New Delhi: Maybe you’ve already noticed, but if you haven’t: retail prices of almost all products and services of everyday use — from food to footwear and movie tickets to medicines — rose sharply in April, signaling India’s inability to control household inflation, partly stoked by a falling rupee.
Data released on May 18 showed that the overall consumer price inflation — a more realistic cost-of-living index because it captures shop-end prices — rose 10.36 percent in April. In cities, it was even higher at 11.10 percent against 9.86 percent in rural India. Retail inflation for March was 9.38 percent.
On a year-on-year basis, vegetable prices clocked the sharpest rise at 24 percent, while that of milk and allied products shot up 14.7 percent. Oil and fats rose 17.5 percent. Non-alcoholic beverages - like your favorite can of Coke - rose 9.52 percent.
Prepared meals prices — a proxy for restaurant rates —rose 9.59 percent partly because the government hiked service taxes and soaring vegetable prices.
Paan and tobacco prices rose 11.3 percent, while healthcare expenses accelerated 6.9 percent. Even prices of personal care products went up 8 percent.
The rupee’s falling value —which hit a fresh all-time low at Rs. 54.91 to the dollar — makes imports costlier. This has pushed up prices of many manufactured products that use small quantities of imported raw materials.
On the bourses, stocks tumbled 200 points during the day touching a four-month intra-day low of 15,809 before recovering to close at 16153 points, up 0.5 percent, or 82 points.
The high prices pose larger macroeconomic problems: the Reserve Bank’s scope to cut interest rates to kick-start the economy now looks limited.