NEW DELHI: India’s headline inflation, as measured by the consumer price index (CPI), moderated in April facilitated by a favourable base effect and benign prices of food items, mainly vegetables.
The year-on-year growth in inflation for the month came in at 4.29 per cent, the lowest in three months. The April figure also shows a decline from March’s 5.52 per cent which was a four-month high but within the RBI’s tolerance band of 2-6 per cent.
Data released by the government on Wednesday showed that food inflation cooled down to 2.02 per cent in April, from 4.87 per cent in the preceding month. Inflation rate for vegetables in April 2021 fell nearly 15 per cent year-on-year, while that of cereal and products fell nearly three per cent. The drop in inflation was due to lower demand for various items caused by regional lockdowns across states.
At the same time, however, elevated levels of prices in the certain food and non-food segments continue to exert upward pressure on headline inflation, say experts.
“While a cost push inflation is still operating through petroleum prices, lower demand for food and beverages, clothing and footwear, transport and communications and miscellaneous goods have driven the overall inflation down,” said DK Srivastava, chief policy advisor, EY India.
Given the high base related to the supply disruptions seen during the nationwide lockdown in April last year, the CPI inflation dipped to a three month low, said Aditi Nayar, chief economist, ICRA. As the lockdown base fades away, the CPI inflation is expected to be back to an average of five per cent in the remainder of the first half of the fiscal year thus ruling out any possibility of rate cuts at least in immediate future, she added.
Economists also believe that the forthcoming inflation figures may go up mainly on supply side constraints amid localised lockdowns and curfews imposed to control second wave surge in COVID-19 cases, while the government is expected to take measures to support demand to keep the economy afloat.