The Reserve Bank of India's medium-term target is 4 percent.
According to Reuters, wholesale food prices in April rose 0.67 per cent year-on-year, compared with a fall of 0.07 per cent a month earlier, data showed. This may result in RBI maintaining status quo on policy rates in its June 2018 monetary policy review.
While pulses have been witnessing deflation for months now, the rate of deflation, rose in April to 22.46 per cent, up from 20.58 per cent in March.
The inflation data for February was revised upwards to 2.74 per cent from the provisional estimate of 2.48 per cent. The rate had increased to 3.85 per cent in April 2017. Within the category, prices of high-speed diesel rose twice as fast at 13 per cent in April, petrol prices rose by 9.45 per cent in April, up from the 2.55 per cent rise seen in March.
On a YoY basis, onion prices in April 2018 soared higher by 13.62 per cent and potatoes by 67.94 per cent. With this, WPI has surged to 3-month high in the latest month.
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"The global rise in crude oil prices remains a key risk for the inflation trajectory".
"The Government may prefer to wait for additional information about the level at which the monthly GST revenues stabilise after the e-way bill introduction, before reducing excise duty on fuels", said ICRA Principal Economist Aditi Nayar.
Primary articles, which accounts for more than a fifth of the entire wholesale price index, grew 1.41 percent in April from 1.03 percent year a percent ago and 0.24 percent in March. Deflation in vegetables was 0.89% in April, while in the previous month it was 2.70%.
Along with the rise in inflation, a jump in the global price of oil, India's costliest and largest import, overestimated government expenditure and a sharp weakening in the rupee could cause the RBI to review its long-standing neutral stance.