Retail inflation soared to an eight-year high of 7.79 per cent in April on annual basis mainly due to stubbornly high food prices, remaining above the RBI's upper tolerance level for the fourth month in a row. Inflation based on the Consumer Price Index (CPI) was 6.95 per cent in March this year and 4.23 per cent in April 2021. Inflation in the food basket rose to 8.38 per cent in April from 7.68 per cent in the preceding month and 1.96 per cent in the year-ago month.

The Reserve Bank of India has been mandated by the government to ensure that inflation remains at 4 per cent with a margin of 2 per cent on either side. The retail inflation has remained above 6 per cent since January 2022.

After the off-cycle Monetary Policy Committee (MPC) meeting of RBI last week, RBI Governor Shaktikanta Das had said the adverse effects of the unprecedented high global food prices due to the ongoing geopolitical situation are reflecting in the domestic market as well, and going forward inflationary pressures are likely to continue.

Meanwhile, sources said the central bank is likely to raise inflation projections in the MPC meeting next month and would also consider a rate hike to tame inflation which is above its comfort level.

Earlier this month, the MPC raised the key policy rate (repo) by 40 basis points with an aim to tame the rising inflation. It was the first rate hike after August 2018.