Retail inflation witnessed a decline, settling at 4.83 per cent in April, owing to a drop in prices of certain kitchen essentials, as per government data unveiled on Monday. The Consumer Price Index (CPI)-based retail inflation stood at 4.85 per cent in March and 4.7 per cent in April 2023. Although there was a slight uptick in food inflation, reaching 8.70 per cent in April from 8.52 per cent in March, kitchen item costs overall experienced a decrease, as reported by the National Statistical Office (NSO).
The government has directed the Reserve Bank of India (RBI) to uphold inflation at 4 per cent, with a permissible range of 2 per cent on either side.
Key highlights:
Rural and urban breakdown: The Ministry of Statistics & Programme Implementation (MoSPI) shared that the corresponding inflation rate for rural areas was 5.43 per cent, while for urban areas, it stood at 4.11 per cent.
Impact on consumer groups: Among the top five groups, the year-on-year inflation in categories such as ‘Clothing & Footwear’, ‘Housing’, and ‘Fuel & Light’ has decreased since the previous month.
Food inflation: Food inflation, a significant component of the consumer price basket, rose to 8.70 per cent in April, compared to 8.52 per cent in March. This marks the continuation of over 8 per cent year-on-year food inflation since November 2023.
Sectoral inflation: The inflation rate for cereals rose to 8.63 per cent, while pulses saw a slight decrease to 16.84 per cent. Vegetable prices surged by 27.8 per cent in April.
Economic outlook: While March witnessed a 10-month low in CPI inflation at 4.85 per cent, April's inflation rate slightly exceeded economists' expectations.
RBI's tolerance range: The inflation rate remains within the Reserve Bank of India’s (RBI) tolerance range of 2–6 per cent.
Trend in retail inflation: India has seen a gradual decline in retail inflation since December. In December, it peaked at 5.69 per cent, gradually decreasing to 5.10 per cent and 5.09 per cent in January and February, respectively. March marked a significant downturn, recording retail inflation at 4.85 per cent.
RBI projections: RBI Governor Shaktikanta Das recently projected the CPI inflation for FY25 at 4.5 per cent.
Data collection: Price data are collected from selected urban markets and villages covering all States/UTs through personal visits by field staff of the Field Operations Division of the NSO, MoSPI, on a weekly roster. During April 2024, NSO collected prices from 99.9 per cent of villages and 98.5 per cent of urban markets.
The inflation figures provide crucial insights into the country's economic landscape, guiding policymakers and stakeholders in making informed decisions.
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