Consumer Price Index (CPI) or retail inflation came in at 7.79% reaching its fastest level since May 2014.
Inflation has been running ahead of the the Reserve Bank of India’s 2%-6% target range for four straight months, helping trigger a surprise rate hike last week. Governor Shaktikanta Das has since last month stressed the need to prioritize taming price gains over supporting growth, Bloomberg reported.
RBI is likely to continue raising interest rates in its next meeting due in June. Last month, in a shock move, RBI raised interest rates by 40 basis points to 4.40% in an unscheduled monetary policy meeting.
High inflation may force the RBI to raise rates by 75 to 100 basis points over the course of the fiscal year, said Gaurav Kapur, chief economist at IndusInd Bank Ltd. in Mumbai. Inflation will likely stay above 6% until September, he added.
According to Thursday’s release, consumer food prices rose almost 8.4% while fuel gained about 11%, Bloomberg said.