Inflation slips to 8.66% in April, but fuel shock looms

India's inflation rate fell to 8.66% during April but economists warned that high oil and commodity prices will likely knock up prices of most manufactured items in the coming months. HT reports.

India's inflation rate fell to 8.66% during April but economists warned that high oil and commodity prices will likely knock up prices of most manufactured items in the coming months.

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Wholesale prices-based inflation rate was 9.04% in March.

Oil companies' decision to raise petrol prices by R 5 per litre on Saturday and a possible hike in the prices of diesel and LPG will further raise the inflation rate in the coming months, economists said.

An empowered group of ministers is expected to consider a Rs 4 per litre increase in diesel prices and Rs 20-25 per cylinder hike in liquefied petroleum gas (LPG) prices.

Finance minister Pranab Mukherjee said that enhanced food supplies will bring down prices of staple items, but prices of non-food articles continue to remain a key worry. "Inflation in non-food articles is a continued source of concern," Mukherjee said in a statement.

"It (non-food inflation) remains elevated at over 27% in April. Sustained high non-food primary prices create cost-push inflationary conditions in the manufacturing sector," he said.

High food and commodity prices are fanning prices of most manufactured goods, besides posing a threat to the broader economic expansion.