NEW DELHI, May 12: The annual retail inflation eased to 4.7% in April from 5.66% the previous month, government data showed on Friday. It is for the second month in a row that Consumer Price Index (CPI) based inflation remained within the RBI’s comfort zone of below 6%.
Retail inflation has fallen to an 18-month low mainly due to cooling food prices.
The retail inflation based on Consumer Price Index (CPI) was 5.66% in March 2023 and 7.79% in the year-ago period. Retail inflation in April is the lowest since October 2021 when it was at 4.48%.
Industrial output
India’s industrial production rose 1.1% in March, according to official data released on Friday.
Factory output measured in terms of the Index of Industrial Production (IIP) grew 2.2% in March 2022.
The data released by the National Statistical Office (NSO) showed that the manufacturing sector’s output increased 0.5% in March 2023.
Mining output rose 6.8% during the month under review while power output declined by 1.6% in March.
The IIP grew 5.1% in 2022-23 as against a growth of 11.4% in 2021-22.
Inflationary pressures
According to the National Statistical Office, inflation in the food basket was 3.84% in April, as against 4.79% in March and 8.31% in the year-ago period.
Retail inflation rose from 5.7% in December 2022 to 6.4% in February 2023 on the back of higher prices of cereals, milk and fruits and slower deflation in vegetable prices.
Last month, India’s central bank surprised markets by holding its key repo rate steady after six consecutive hikes to tamp down inflationary pressures. Many economists expect it to remain on pause mode for the rest of the year to support the recovery in Asia’s third-largest economy.
The Reserve Bank of India has projected the CPI inflation at 5.2% for FY2023-24, with 5.1% in Q1, 5.4% in Q2, 5.4% in Q3, and 5.2% in Q4, and risks evenly balanced.
Easing inflation will bring relief to policy makers when the economy is facing headwinds from geopolitical tensions and slowing global demand.
With higher borrowing costs weighing on India’s world-beating growth, the central bank put the brakes on its tightening cycle in April, while leaving the door open for maneuvering until the “war against inflation” is over.
The decline in inflation is expected to help the central bank’s six-member Monetary Policy Committee leave the benchmark rate unchanged for the second time when it meets on June 6-8.
Although price pressures have eased, unseasonal rains and rising housing costs are the new risks on the minds of policy makers. Earlier this month, finance minister Nirmala Sitharaman said inflation is “slightly above” a tolerable level and the government is working to control it. (AGENCIES)
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