India's inflation continues to climb

Street vendors sell lemons along a road in Ahmedabad on May 1, 2022. SAM PANTHAKY AFP NEW DELHI INflation continues to climb in India as people feel the pinch, causing an increase in savings due to forecasts of further spikes in food prices and other essential items.

The Wholesale Price Index rose 15.08 percent in April, a three-decade high, up from 14.55 percent in March, according to the latest data released by the federal government.

In April, the Consumer Price Index was 7.79 percent, the highest level in eight years, compared to 6.95 percent the previous month and 4.23 percent in April last year.

The cost of living in India is rising with bank loan interest rates, fuel petrol, diesel, LPG and CNG and food prices all surging.

The Indian government is taking measures to ensure food supplies and not a hoarding of essential food items to counter rising inflation. The federal government has curbed wheat exports as a major measure.

The Indian rupee has fallen to its lowest level against the US dollar. On Tuesday, the Indian currency hit a new record low at 77.69 after it fell by 14 paise against the US dollar, due to persistent foreign fund outflows and elevated global crude oil prices. The currency had previously breached the 77 mark against the US dollar in March.

The weaker position of the US dollar, a sell off in equity markets, elevated crude prices and India's rising inflation are some of the reasons why the Indian Rupee's falling value is the most common reason it falls.

In India, bank loans have become increasingly costly after the Reserve Bank of India RBI raised key interest rates by 40 basis points to tame surging prices. The move was seen as a counter to a similar move by the US Federal ReserveFederal Reserve.

Given the inflation in the world, and the fact that all central banks want to maintain price stability, it is no surprise that central banks, including the RBI, have chosen to raise interest rates, said Tulsi Jayakumar, professor of economics at the SP Jain Institute of Management Research.

It was not a question of whether or not it was a question of when, and obviously the decision has been influenced by the US Fed rate hike. She noted that it is unavoidable that the decision to increase interest rates in the short term might cause headwinds, because the latter is responding to the 40 year high headline inflation of 8.5 percent.

Sunil Sinha, the principal economist and director of India Ratings and Research believes that it is not appropriate to conclude that India's rate hike has followed the US Fed's footsteps. He said that the Indian currency is not a world currency, and world trade happens in USD denominations. Foreign investments funds bond arrivals in India depend on interest rates in India, and they have to be above US interest rates. The arbitrage is gone if the rates are the same and the investors find it profitable. According to figures released by the Centre for Monitoring India's Economy, overall unemployment in India has swelled last month, according to figures released by the Centre for Monitoring Indian Economy.

According to a recent report by the think tank, the country's unemployment rate rose to 7.83 percent in April from 7.6 percent in March. In April, the urban unemployment rate rose to 9.22 percent from 8.28 percent in the previous month, while rural unemployment fell to 7.18 percent from 7.29 percent in March.

Economists say that job opportunities fell because of a slow economic recovery and sluggish domestic demand. The highest unemployment rate, 34.5 percent, was recorded in the northern state of Haryana, followed by 28.8 percent in the western state of Rajasthan.