The good news is that retail inflation has marginally eased for the second month in a row to 4.83 percent in April. The fall was mainly driven by lower fuel prices. The bad news from the government data is that food inflation shot up to 8.70 percent in April, compared to 8.52 percent in March. This was pushed by a sharp price rise in a wide spectrum of food items—cereals (8.63 percent), fruits (5.22 percent), oils (9.43 percent), and meat and fish (8.17 percent). For the common man, the heaviest burden is the persistent rise in the price of vegetables and pulses at 27.8 percent and 16.8 percent, respectively.
Food inflation, which hits the poor harder, has been at more than 8 percent year-on-year since November 2023. The data also showed that consumer inflation for rural households was higher at 5.43 percent, compared to 4.11 percent for urban consumers. For the government as well as for economists and planners, the real worry is that food inflation will probably get worse before it gets better. The continuing heat wave is expected to hit vegetable supplies further, possibly pushing up prices in May too; and the high prices in cereals and pulses will likely continue till the next crop comes in.
Overall, the retail inflation rate has been under control. The Reserve Bank, too, expects the downward curve to help reach an average of 4.5 percent this year from the 5.4 percent clocked in 2023-24. However, the RBI is holding its key lending rate steady at 6.5 percent for the seventh straight quarter, as it wants inflation to fall to a more durable 4.0 percent. In an otherwise improving scenario, food inflation continues to be a worry. Not only do food items account for almost half the basket that makes up the consumer price index, they also have a direct bearing on the living standards of people.
The government has tried to control their prices, but has largely failed. Onion exports were banned to ensure easier supplies and prices, but then it was reversed earlier this month with an eye on the elections. Some factors such as extreme weather conditions that hit production cannot be controlled. But man-made factors like rising fertiliser and other input costs can be kept in check to keep inflation down.