India's retail inflation eases marginally in April; here's what experts have to say

New Delhi [India], May 14 : India's retail inflation eased to 4.83 per cent in April, down from 4.85 per cent in March. However, consumer food price inflation surged to 8.70 per cent from 8.52 per cent last month, according to data from the Ministry of Statistics and Programme Implementation released Monday.

The retail inflation in India though is in RBI's 2-6 per cent comfort level but is above the ideal 4 per cent scenario. Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory quite well.

The latest eased month-on-month retail inflation comes on the heels of RBI having maintained the status quo in the repo rate for the seventh straight occasion.

Barring the recent pauses, the RBI has raised the repo rate by 250 basis points cumulatively since May 2022 in the fight against inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.

The repo rate is the rate of interest at which the RBI lends to other banks.

In India, consumer price index (CPI) inflation was 4.9 per cent in March after averaging 5.1 per cent in the preceding two months, following the recent peak of 5.7 per cent in December 2023.

Inflation continues to remain the main concern for the Reserve Bank of India's monetary policy committee members before it goes ahead and loosens its stance on key interest rates.

As per the minutes of the latest monetary policy meeting released recently, there have been several mentions of uncertainties around inflation. Going ahead, food price uncertainties would continue to weigh on the inflation outlook, according to the minutes.

Pressure in food prices has been interrupting the ongoing disinflation process in India, and posing challenges for the final descent of inflation trajectory to the 4 per cent target, as per minutes of latest RBI's monetary policy.

Following are some of the excerpts of views from analysts and experts on the April retail inflation numbers:

Rajani Sinha, Chief Economist, CareEdge Ratings:

Reversing last month's trend, food inflation inched up to 7.9 per cent. However, the outlook for food inflation has brightened due to anticipations of a normal monsoon. The persisting deflation in the fuel and light category deepened further due to the recent move to reduce LPG prices. Apart from elevated food inflation, incremental risk to inflation stems from the recent uptick in global commodity prices, especially industrial metals.

We expect inflation to average 4.8 per cent in FY25. If food inflation moderates, we expect RBI to cut policy interest rate by a shallow 50 basis points in the second half of the fiscal year.

Dharmakirti Joshi, Chief Economist, CRISIL:

The mild easing of the headline number in April is encouraging, but the acceleration of this downtrend is what matters, especially since recent swings have been worrying. Food inflation, which has a 39.1 per cent weight in the CPI gauge, has remained well above 8 per cent for six months now.

Pressure on food prices continues, including due to the ongoing heatwaves. Our base case is that the upcoming monsoon rains can offer respite, assuming they are well distributed in terms of time and geography. Net-net for fiscal 2025, we expect CPI inflation to broadly ease this fiscal to 4.5 per cent from 5.4 per cent last fiscal.

Sanjeev Agrawal, President, PHD Chamber of Commerce and Industry:

Proactive measures by the Government to strengthen the supply chains are leading to the softening of inflation in many items. Going forward, the inflation trajectory is expected to become normal by September/October 2024 as many of the kharif crops will be entering the mandis and supplementing the existing supply.

Nish Bhatt, Founder and CEO, Millwood Kane International:

CPI numbers suggest that the central bank would maintain rates in the next policy. Though, it is necessary to keep an eye on food inflation and rural consumption.

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