In April, India’s retail inflation decreased slightly to 4.83 per cent, but consumer food price inflation increased to 8.70 per cent. This comes amidst the Reserve Bank of India’s (RBI) efforts to curb inflation by maintaining the status quo on the repo rate for the seventh consecutive time. Since May 2022, the RBI has raised the repo rate by 250 basis points in an attempt to tackle inflation, which is above the ideal 4 per cent scenario. Despite efforts to manage inflation, it continues to be a concern for the RBI and experts.
Consumer price index (CPI) inflation in India was 4.9 per cent in March, after averaging 5.1 per cent in the preceding months. The recent peak of 5.7 per cent in December 2023 has led to uncertainties around inflation for the RBI’s monetary policy committee members. Food price uncertainties remain a significant factor affecting the inflation outlook, according to the minutes of the latest monetary policy meeting. Analysts and experts have shared their views on the April retail inflation numbers, highlighting the challenges posed by food inflation and global commodity prices.
Rajani Sinha, Chief Economist at CareEdge Ratings, mentioned that food inflation increased to 7.9 per cent, but the outlook has improved due to expectations of a normal monsoon. The deflation in the fuel and light category has deepened, primarily due to the reduction in LPG prices. Sinha expects inflation to average 4.8 per cent in FY25, with a potential policy interest rate cut by the RBI in the second half of the fiscal year. Dharmakirti Joshi, Chief Economist at CRISIL, emphasized the importance of sustained easing of the headline number, especially given the persistent high food inflation.
Sanjeev Agrawal, President of PHD Chamber of Commerce and Industry, highlighted the proactive measures by the Government to strengthen supply chains, leading to a softening of inflation in certain items. He expects the inflation trajectory to normalize by September/October 2024, as kharif crops enter the market. Nish Bhatt, Founder and CEO of Millwood Kane International, noted that CPI numbers indicate the likelihood of the central bank maintaining rates in the next policy announcement. However, he stressed the importance of monitoring food inflation and rural consumption trends to gauge the overall economic situation.
Overall, the recent trends in retail inflation in India have been a topic of discussion among economists and policymakers. While efforts to manage inflation have been made, challenges such as food price uncertainties and global commodity price fluctuations continue to impact the inflation trajectory. As the RBI and experts assess the situation, the focus remains on sustaining the easing of inflation and supporting economic stability in the country.
