April CPI Data: India's Retail Inflation Eases To 3.16%, Lowest Since July 2019
The decline was led by vegetable inflation, which contracted by 10.98% after contracting by 7.04% in March.
India's retail inflation has slipped to its lowest in nearly six years, with cooling vegetable prices leading the deceleration.
The consumer price index-based inflation moderated to 3.16% in April, from 3.34% in March, according to data from the Ministry of Statistics and Program Implementation on Tuesday. This is the lowest inflation reading since July 2019.
A Bloomberg poll of economists had pegged the median inflation estimate at 3.2% for April.
Food and beverage inflation eased to 2.14% from 2.88% in March. The decline was led by vegetable inflation, which contracted by 10.98% after contracting by 7.04% in March.
Core inflation — that excludes volatile food and fuel components — rose by 4.22% in April compared to 4.20% in March, according to Bloomberg.
Encouraging prospects for agricultural production, the arrival of fresh Rabi harvest, and comfortable reservoir levels are positives for food inflation, Rajani Sinha, chief economist at Care Ratings said.
The India Meteorological Department's projection of an above-normal monsoon should support robust growth in agricultural output. However, monitoring the monsoon's distributional aspect will be crucial, Sinha added.
The prices of edible oils remain a key concern, especially given the contraction in the sowing of oil seeds, an increase in global edible oil prices, and import dependency in this category, Sinha cautioned.
Key Inflation Metrics
Cereal prices rose by 5.35% after rising by 5.93% in March.
Meat and fish prices declined 0.35% compared to a rise of 0.32% in the previous month.
The inflation rate for milk and milk products was 2.72% compared to 2.56% in the previous month.
Inflation in the pulses category contracted by 5.23% after contracting by 2.73% last month.
Clothing inflation was at 2.67% as against 2.71% in the preceding month.
Housing prices went up by 3% compared to 3.03% last month.
Fuel and light inflation was 2.92% compared to 1.48% in March.
Going ahead, CPI inflation is projected to stay at comfortable levels supported by moderating food inflation, despite headwinds from trade policy uncertainties and geopolitical tensions. On the monetary policy front, moderating inflation should provide comfort to the MPC in undertaking further rate cuts. A 25 basis points rate cut appears forthcoming in the June 2025 policy, followed by easing of 25 basis points each in the August and October 2025 policy reviews, according to Aditi Nayar, chief economist at ICRA.
If the GDP growth print for January-March does not report an acceleration from the 6.2% seen in the October-December quarter, then the MPC may consider frontloading the rate easing, with a 50 basis points cut in the upcoming review, she added.
