Retail inflation eased marginally to 4.83% in April on an annual basis from 4.85% in March last month, as per government data released on Monday, May 10, 2024.
The inflation rate has stayed within the Reserve Bank of India’s (RBI) tolerance range of 2-6%.
According to a survey of 44 economists by Reuters, the expected inflation rate was projected to decrease to 4.80%.
The National Statistical Office (NSO) reported that inflation in the food basket rose to 8.7% in April from 8.52% in March.
Vegetable inflation stood at 27.80% year-on-year, down from 28.30% in March. Additionally, inflation rates for cereals and pulses, significant components of India’s staple diet, were recorded at 8.63% and 16.84%, respectively.
The inflation rate for fuel and light experienced a decrease of 4.24% in April.
“Among the top five groups, the year-on-year inflation on groups ‘Clothing & Footwear’, ‘Housing’ and ‘Fuel & light’ has decreased since last month,” said the official release.
The inflation rates for Clothing & Footwear and Housing were recorded at 2.85% and 2.68%, respectively.
“CPI inflation in April 2024 continues the downward trend since December 2023. It is the second successive month when inflation is below 5%. Although food inflation is marginally higher at 8.7%, the downward pressure emanates from petroleum related commodity groups namely, fuel and light and transport and communication services.
Core inflation has also trended downwards at 3.2%, which is the lowest in the 2012 base CPI series. If this trend continues, CPI inflation in 1Q of FY25 may turn out to be marginally lower than RBI’s projection of 4.9%.” said DK Srivastava, Chief Policy Advisor, EY India.
The RBI’s Monetary Policy Committee (MPC) decided to maintain the policy repo rate at 6.5% for the seventh consecutive time in its announcement on April 5.
As per the latest forecast from the central bank, Consumer Price Index (CPI) inflation is projected to be 4.5% for the current financial year.
“Unchanged headline and core inflation reading from previous month will continue to provide respite to the MPC. However, erratic weather and heatwaves should keep the overall sentiment cautious. We do not expect much change to RBI’s narrative for now, as a prolonged pause in policy rates remains the base case,” said Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank.