India's headline inflation broke a recent slowing trend, reducing the odds of further interest rate cuts next month by the Reserve Bank of India, the annual consumer price inflation accelerated to 5.39 per cent in April.
Consumer price inflation, which the Reserve Bank of India (RBI) targets in setting interest rates, rose at a faster-than-expected pace, to 5.39 percent last month, from 4.83 percent in March.
The inflation in April was driven mainly by higher food costs. An early summer heat wave led to an increase of 3.8 percent in month-on-month prices for staple vegetables.
Overall retail food inflation came in at 6.32 percent as compared with 5.21 percent in March.
What is inflation?
Inflation refers to the increase in overall price level in the economy. Inflation reduces the purchasing power of the people.
Measurement of Inflation:
Inflation in India is officially measured on monthly basis by comparing the prices prevalent in last year in the same month.
Measures to Control Inflation:
1. Monetary Policy: Money supply can be reduced to control inflation.
2. Fiscal Policy: Government can reduce its expenditure and increase its income to reduce inflation.
3. Administrative measures such as check on hoarding of commodities, maintenance of law and order etc.
4. Management of Supply side factors.
5. Management of Demand side factors.