Retail inflation in India eased slightly to hit an 11-month low of 4.83% year-on-year in April 2024, government data released on Monday showed. The figure was marginally lower than the 4.85% recorded the previous month, closely matching the Reuters poll’s forecast of 4.80%. Importantly, it remains within the Reserve Bank of India’s (RBI) tolerance band of 2-6%.
According to the National Statistical Office (NSO), food basket inflation rose to 8.7% in April from 8.52% in March. Accordingly, in April 2024 the inflation rate was 0.48%.
Breaking down the inflation rates across various commodities, vegetable inflation declined marginally to 27.80% year-on-year, while grains and pulses inflation rates were recorded at 8.63% and 16.84%, respectively. It is noteworthy that the inflation rate for fuel and light decreased by (-)4.24% in April 2024.
Among the five largest groups, inflation rates for the items “Clothing and footwear”, “Housing” and “Fuel and light” decreased compared to the previous month. In the apparel and footwear sector and the housing sector, the inflation rate was 2.85% and 2.68%, respectively.
Reserve Bank of India (RBI) Governor Shaktikanta Das, speaking at the end of the first bi-monthly Monetary Policy Committee (MPC) meeting of FY25, highlighted inflation as a major concern. He expressed optimism, noting that inflation appears to be returning to the desired threshold of 4%.
Governor Das highlighted the downward trajectory of inflation driven by the supportive base effect, but also acknowledged ongoing pressures from service prices. Despite the decline in overall inflation for January-February 2024 to 5.1%, uncertainty remains due to chaotic movements in food prices.
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In February 2024, food inflation rose to 7.8%, driven by vegetables, eggs, meat and fish, while fuel prices continued their deflationary trend for the sixth month in a row. The core consumer price index (CPI), excluding food and fuel, showed a decline in inflation, falling to 3.4% in February.
At its April 2024 meeting, the MPC maintained its inflation forecast for the fiscal year at 4.5%, assuming normal monsoon conditions. However, concerns remain over rising prices and supply chain disruptions caused by the Red Sea crisis amid a hot summer expected.
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