India’s retail inflation drops to 3.16 percent
Business Business: Further decline in food prices has given a relief to household budgets, as India’s retail inflation fell to 3.16 per cent in April from 3.34 per cent in March, according to data released by the Statistics Ministry on Tuesday.Food inflation, which accounts for nearly half of the Consumer Price Index (CPI) basket, slowed to 1.78 per cent in April from 2.69 per cent in March. This is the third consecutive month when inflation has remained below the RBI’s 4 per cent medium-term target and will enable the central bank to continue its soft money policy to boost economic growth.
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India’s annual inflation rate based on the Consumer Price Index (CPI) fell to 3.34 per cent in March this year compared to the same month last year, the lowest since August 2019.Retail inflation in the country has been on a downward trend in recent months. The Reserve Bank’s Monetary Policy Committee has lowered its inflation forecast for 2025-26 to 4 per cent from 4.2 per cent earlier, as “the food inflation outlook has turned decisively positive,” said RBI Governor Sanjay Malhotra during the recent monetary policy review meeting.
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The food inflation outlook has turned decisively positive. The RBI governor pointed out that uncertainties about rabi crops have reduced significantly and second advance estimates point to record wheat production and higher output of major pulses compared to last year. He said that along with good kharif arrivals, this is expected to lead to a lasting moderation in food inflation. “The sharp decline in inflation expectations for three months and one year in our latest survey will also help anchor inflation expectations,” he added.
In addition, the decline in crude oil prices bodes well for the inflation outlook. However, global market uncertainties and concerns of recurrence of adverse weather-related supply disruptions pose risks to the inflation trajectory. Taking into account all these factors and assuming a normal monsoon, CPI inflation for FY2025-26 is projected at 4.0 per cent, with Q1 at 3.6 per cent, Q2 at 3.9 per cent, Q3 at 3.8 per cent and Q4 at 4.4 per cent, he said. Malhotra also believes that risks are evenly balanced.
