Gold sparkled, but household budgets took a hit as April inflation rose to 3.48%

New Delhi: India’s retail inflation edged higher to 3.48 per cent in April, driven largely by rising prices of gold and silver jewellery as well as key food items, according to official data released on Tuesday.

The Consumer Price Index (CPI)-based inflation rate, using 2024 as the base year, stood at 3.40 per cent in March, after easing to 3.21 per cent in February and 2.74 per cent in January.

Data published by the National Statistics Office (NSO) showed that food inflation also increased during the month, climbing to 4.20 per cent in April from 3.87 per cent in March.

Among the sharpest price increases were silver jewellery, which recorded inflation of 144.34 per cent, followed by coconut and copra at 44.55 per cent, and gold, diamond and platinum jewellery at 40.72 per cent. Prices of tomatoes rose by 35.28 per cent, while cauliflower registered a 25.58 per cent increase.

In contrast, prices of potatoes, onions, peas, motor cars and air-conditioners declined during the month.

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The Reserve Bank of India (RBI), which uses CPI data to guide its bi-monthly monetary policy decisions, last month projected inflation for the 2026–27 financial year at 4.6 per cent, including 4 per cent in the first quarter.

The central bank also warned that elevated global energy prices linked to tensions in West Asia, alongside the possibility of El Nino weather conditions affecting the southwest monsoon, could push inflation higher in the coming months.

According to the NSO figures, inflation in rural areas stood at 3.74 per cent, compared with 3.16 per cent in urban centres.

Among states, Telangana recorded the highest inflation rate at 5.81 per cent, while Mizoram posted the lowest at 0.69 per cent.

The NSO gathers price data from 1,407 urban markets, including online platforms, and 1,465 villages across all states and Union Territories.

Economists said the rise in food inflation reflected both seasonal pressures and the fading impact of last year’s favourable base effect.

Rajani Sinha, Chief Economist at CareEdge Ratings, said inflation in restaurant and accommodation services had likely risen due to higher input costs, including recent increases in LPG prices.

She added that core inflation remained stable at 3.4 per cent and would be closer to 2 per cent if precious metals were excluded.

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Dharmakirti Joshi, Chief Economist at Crisil, said the conflict in West Asia, combined with heatwaves and the expected El Niño conditions, would keep food inflation and agricultural production under close watch during the current fiscal year.

He noted that inflation in electricity, gas and fuel eased to 0.7 per cent in April from 1.7 per cent in March, largely because of a favourable base effect.

However, he cautioned that although retail fuel prices had remained stable due to unchanged petrol and diesel prices, inflationary pressures could intensify if fuel costs rise in the coming months.

Rajni Thakur, Chief Economist at L&T Finance, described the April inflation figure as better than expected, noting that while food prices had risen modestly, transport costs had eased.

Meanwhile, Vikram Chhabra, Senior Economist at 360 ONE Asset, said the relatively subdued inflation reading suggested that higher energy and raw material costs had not yet fully filtered through to consumers.

He warned, however, that any future rise in fuel prices could trigger broader inflationary effects across the economy.