New Delhi, May 12 (FN Agency) India’s retail inflation measured by Consumer Price Index (CPI) fell to 4.70% in April, 2023 from 5.66% in March primarily on the back of cooling food prices, data released by Ministry of Statistics & Programme Implementation (MoSPI) showed on Friday. Food inflation dropped to 3.84% during April from 4.79% in March. Retail inflation had reached 7.79% in April 2022 necessitating hikes in policy repo rate by the central bank. Commenting on the latest inflation data, ICRA Chief Economist Aditi Nayar said, “The April 2023 CPI inflation eased to an 18 month low of 4.7%, benefitting from the high base as well as cooler than normal temperatures, which delayed the seasonal rise in prices of perishable items.”
The retail inflation is now below Reserve Bank of India’s upper tolerance level of 6%. The overall price level has moderated primarily due to lower food and fuel prices. With inflation showing signs of moderation, the RBI in its monetary policy last month hit the pause button after consistently raising the benchmark lending rates. The RBI’s monetary policy committee (MPC) had on April 6 voted unanimously for keeping the policy repo rate unchanged at 6.5%. The RBI has increased the policy repo rate cumulatively by 250 basis points or 2.5% in the last one year starting May 2022. Considering various factors and assuming an annual average crude oil price (Indian basket) of US$ 85 per barrel and a normal monsoon, the RBI has projected CPI inflation at 5.2% for 2023-24. Given the record Rabi harvest, food inflation is expected to remain under control but milk prices are likely to remain firm going by the current trend. “The CPI inflation at 4.7% is a big positive. After rising to levels of 6% and 7% for months, we finally witnessed a softness in retail inflation. We see a trend of softness in inflation with it being at 5% for March month and below the 5% mark for April. This was primarily due to a higher base and softness in food and core inflation,” said Nish Bhatt, Founder & CEO, of Millwood Kane International.