India's retail inflation rate fell to 4.83% in April from 4.85% in March, suggesting a possible shift towards the medium-term inflation target of 4.0%.
India's retail inflation rate fell to 4.83% in April from 4.85% in March, suggesting a possible shift towards the medium-term inflation target of 4.0%.
In particular, pre-election fuel price cuts have been reflected in inflation. However, this decline is unlikely to be much of a relief to the new government, as inflation is expected to rise in May and the coming months remain uncertain.
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In particular, pre-election fuel price cuts have been reflected in inflation. However, this decline is unlikely to be much of a relief to the new government, as inflation is expected to rise in May and the coming months remain uncertain.
First, stable inflation in April was supported by favorable base effects. Looking at the month-on-month comparison, the consumer price index (CPI) in April increased by 0.48% month-on-month, marking the highest month-on-month increase rate since November 2023.
This increase was mainly due to significant increases in certain categories, with food prices increasing by 0.74%, pot, tobacco, and intoxicants increasing by 0.44%, and housing prices increasing by 0.95%.
These price increases suggest that the prices of these items have increased significantly compared to the previous month. In particular, the strong month-on-month increase in food prices was enough to offset the baseline effect, with food inflation rising to 8.70% from 8.52% in March.
“Food inflation as a percentage of the CPI index is 39.1%, but has remained well above 8% for the past six months. Pressure on food prices continues, including due to the ongoing heatwave.” ratings agency Crisil said in a note on Monday.
In the food category, vegetables, which generally cause large fluctuations in overall inflation, recorded a 27.8% year-on-year increase in prices and a 1.27% month-on-month increase in prices.
Interestingly, in the vegetable sector, some items experienced the fastest price increases from the previous month, while others experienced the fastest price declines.
Overall, food and beverages is well above 4.0%, while other groups are well below target. Pre-election price cuts in petrol, diesel and LPG led to deflation in the fuel and diesel group.
Over the past few months, core inflation, which excludes food and fuel costs, has remained below 4.0% for five consecutive months, providing some comfort. However, the expected rise in global commodity prices could disrupt this trend.
Going forward, food price fluctuations, strong international commodity prices, and continued disruption to maritime trade routes in the Middle East region will raise caution, Quanteco Research said in a report.
