NEW DELHI: Consumer price inflation hit an 18-month low at 4.7% on account of moderation in food prices, the government data showed. This is the second straight month when retail inflation came below the Reserve Bank of India’s upper tolerance limit of 6%. In March, CPI inflation came in at 5.7%, while a year ago during the same month it was at 7.79%.
The inflation in the food basket plunged to 3.84% in April as against 8.31% in the year-ago period and 4.79% in March, according to the data released by the Ministry of Statistics and Programme Implementation (MoSPI).
RBI Governor Shaktikanta Das said the inflation number at 4.7% in April is quite satisfying and the latest data gives confidence that the monetary policy is on the right track. Speaking on the sidelines of an event, the Governor did admit that there is a statistical base effect. RBI has the mandate to keep the inflation in the range of 2%-6% and the next monetary policy committee is on June 06.
The central Bank had reduced the inflation target to 5.2% for FY24 from 5.3% in the March policy. It also put a pause on rate hikes after six continuous rate hikes by 250 basis points to contain inflation. “Cost conditions have somewhat eased, and inflation expectations of households have also eased. On the upside, adverse climatic conditions are a risk to future inflation trajectory,” Das had said.
The central bank expects inflation for Q1, Q2, Q3 and Q4 at 5.1%, 5.4%, 5.4% and 5.2%, respectively, with risks evenly balanced. “The headline inflation has come broadly in line with our expectations. However, upside risks to inflation persist given the monsoon-related uncertainty. We expect the RBI to stay on a prolonged pause in order to anchor inflationary expectations,” Upasana Bhardwaj, Chief Economist, Kotak Mahindra Bank said while commenting on the latest inflation data.
The NSO data further showed that retail inflation in the rural areas during April was 4.68% and 4.85% in urban areas. The price data were collected from selected 1,114 urban markets and 1,181 villages covering all states/UTs through personal visits by field staff of Field Operations Division of NSO, an official statement said.
