India’s retail inflation dropped to 4.25per cent in May from 4.7 per cent in April, according to a data from the Ministry of Statistics and Programme Implementation on Monday. The consumer price-based index (CPI) inflation in May is lowest in 25 months. The food inflation also eased to 2.91 per cent in April. It was 3.84 per cent in the month of April. The food basket accounts for nearly half of the CPI. While, inflation in fuel and light also eased to 4.64 per cent, from 5.52 per cent in April.
It was for the second month in a row that retail inflation remained within the Reserve Bank of India (RBI)’s comfort zone of below six per cent. Despite the huge 227-basis-point fall since January, CPI inflation remains above the central bank’s medium-term target of 4 per cent for the 44th month in a row.
India’s CPI inflation in April fell sharply to 4.7 per cent from 6.4 per cent in February on the back of favourable base effects, with softening observed across all the three major groups.
The RBI’s Monetary Policy Committee (MPC), headed by Governor Shaktikanta Das, on Thursday announced that the central bank marginally lowered its inflation projection for the current financial year to 5.1 per cent. Das said the RBI’s monetary policy actions are yielding the desired results. In April, the RBI had estimated the consumer price index (CPI) based retail inflation at 5.2 per cent during the fiscal 2023-24.
The central bank has projected the CPI-based inflation at 5.2 per cent for FY23-24, with 5.1 per cent in Q1, 5.4 per cent in Q2, 5.4 per cent in Q3, and 5.2 per cent in Q4, and risks evenly balanced.
The inflation price data are collected from selected 1,114 urban markets and 1,181 villages covering all states/UTs by the NSO. During the month of May 2023, the NSO collected prices from 98.56 per cent villages and 97.04 per cent urban markets, while the market-wise prices reported therein were 88.56 per cent for rural and 90.76 per cent for urban.
Meanwhile, the Index of Industrial Production (IIP) rose sharply to 4.2 per cent in April. It was 1.1 per cent in March, according to NSO data.