New Delhi: India’s retail inflation, as measured by the Consumer Price Index (CPI), was 6.95% in March, the third straight month when the retail inflation was above the Reserve Bank’s mandate which is to keep it below six per cent. The Consumer Price based inflation in March is at a 17 month high. Most of the commodity groups were at a record level in the last more than a year. For instance, cereals and products were at a high of 19 months in March this year. Similarly, milk products and vegetables were also at a high of 16 months.
Some other items touched even higher record levels in March. For example, clothing items were at their highest levels in the last 100 months, footwear touched the high of last 111 months, and household goods and services touched the record high of 102 months. While personal care items were at a high of 13 months and the food index was at its highest in the last 16 months.
Health inflation is a cause of concern
Sunil Sinha, Principal Economist at India Ratings and Research, says his agency has been pointing out that the health and household goods and services inflation is turning structural because in the last 15 months health inflation has been in excess of 6% and household goods and services inflation was in excess of 5% in the last 10 months.
Structural inflation means that the inflation has acquired a certain degree of permanency and rigidity as against its seasonal nature which is witnessed in food items, particularly the price rise witnessed in vegetables and fruits which cools down with the arrival of new crops. Sinha says with the increase in the cost of essential medicines from April this year, health inflation is likely to exert further pressure on the retail inflation.