Crisil Economy First Cut: Shielded by policy, so far

Inflation based on the Consumer Price Index (CPI) rose mildly to 3.48% in April from 3.40% in March. 

While the conflict in West Asia has crossed 74 days, the upside risks to retail inflation seem to be materialising at a snail’s pace, indicating that the consumer remains largely protected so far. 

The food basket saw some impact of the conflict, in categories such as vegetable oils and ready-made food. 

Inflation in the electricity, gas and fuels category eased, supported by the base effect, while that in transportation fuels remained unchanged owing to the government’s decision to keep pump prices of petrol and diesel steady. 

The expected pass-through of higher energy and other input prices to consumers of various products and services is yet to play out in the aggregate core inflation, which remained unchanged at 3.7% for the fourth consecutive month. Although inflation in restaurants and accommodation services as well as household furnishings, equipment and maintenance increased as expected, a slower rise in precious metal inflation provided some cushion.