Cloud Memorystore Redis high CPU utilisation

Addressing your questions.

1. How many CPU cores do the M4 capacity tier correspond to?
Cloud Memorystore for Redis is a Google-managed service which means that Google can reserve the inner details(resources) of the virtual machine that is running the redis service. Still it is expected that the higher the capacity tier, the more resources(CPU) the virtual machine will have. For your case in particular, adding CPUs will not solve issues around CPU usage because redis service itself is single threaded.

As you can see from the previous link:

To maximize CPU usage you can start multiple instances of Redis.
If you want to use multiple CPUs you can start thinking of some way to shard earlier.

2. Is it really alarming to have more than 100% CPU utilisation?
Yes, it is alarming to have high CPU utilization because it can result in connection errors or high latency.
CPU utilization is important but also whether the Redis instance is efficient enough to sustain your throughput at a given latency. You can check the redis latency with the command redis-cli --latency while CPU % is high.

3. Do we expect any noticeable performance issues?
This is really hard to say or predict because it depends on several factor(client service, commands run within a time frame, workload). Some of the most common causes for high latency and performance issues are:

• Client VMs or services are overloaded and not consuming the messages from Redis: When a client opens a TCP connection to redis then the redis server has a buffer of messages to send to that connection. If a client service has its CPU maxed out, giving no time for the kernel to receive messages from redis then they fill up on the redis server.

• The commands executed are consuming a lot of CPU: The following commands are known to be potentially very expensive to process:
  EVAL/EVALSHA
  KEYS
  LRANGE
  ZRANGE/ZREVRANGE

4.-What are the options to tackle the performance issues (if any) caused by higher CPU utilisation (>=100%)?
This question revolves mainly around the scaling design of your implementation. Since redis is single threaded, a better approach to reduce CPU % would be by sharding your data in multiple redis instances and have a proxy in front of it to distribute the load. Please take a look at the graph under section Twemproxy from this link.

5.-Will switching to M5 capacity tier address the high CPU consumption and the corresponding issues?
Switching to a higher capacity tier should help with the latency temporarily but this is known as vertical scaling which is limited to the tiers that Cloud Memorystore offers.