Retail inflation eases to 4.7% in April
The base effects from previous April, when it had reached an eight-year high of 7.8%, helped India’s retail inflation drop to an 18-month low of 4.7% in April, maintaining below the Reserve Bank of India’s 6% tolerance criterion for price rise for a second consecutive month.
Urban consumers experienced a price increase of 4.85% in April compared to 5.9% in March, while rural consumers experienced a price increase of 5.5% to 4.7%. According to the Consumer Food Price Index, inflation decreased from 4.8% in March to 3.84% last month.
The Consumer Price Index (CPI) increased by 0.5% from March levels on a sequential basis, while food prices increased by 0.6%, doubling the monthly increase from February to March, when headline retail inflation was estimated at 5.66%.
Vegetable prices increased 1.8% over March 2023 prices although continuing to decline year over year, falling 6.5% in April. For the third consecutive month, the price of edible oils and fats saw deflation, decreasing sharply 12.33% from April 2022, when the immediate aftermath of the Russia-Ukraine conflict had caused a global supply shock.
Aditi Nayar, chief economist at ICRA, noted that the 4.7% inflation print in April benefited from both the high base and the cooler-than-average temperatures in March, which postponed the seasonal increase in the cost of perishable goods and helped keep the prices of some vegetables in control.
Inflation for cereals (down from 15.3% in March to 13.7% in April), milk and milk products (down from 9.3% in March to 8.85% in April), and spices (down slightly from 18.2% to 17.4% in April) all decreased only little in April.
“The sequential price momentum in items like milk and pulses remains a concern,” said Rajani Sinha, chief economist at CARE Ratings, who anticipates that retail inflation would average 5.1% for the years 2023–2024 and stay below 5% through June. She believed that the primary risk to food prices and overall CPI inflation could come from weather-related interruptions.
Madan Sabnavis, the chief economist at the Bank of Baroda, claimed that price pressures are also apparent in pulses, whose inflation increased to 5.3% in April from 4.3% in March.
“Prices will be under pressure and inflation will be greater than average until the fresh harvest is available to traders in October. Because pulses have limited access to irrigation, the monsoon outlook is crucial in this area, he said.
Retail Inflation Sees Significant Drop in April, Hits 4.7%: Key Points
- However, retail inflation has exceeded the RBI’s objective of 4% for the 43rd straight month.
- This favourable inflation report was influenced by the favourable base in April.
- Consumer food price index was 8.31% in April 2022, a considerable reduction from the previous month’s rate of retail food inflation of 4.79% to 3.84% in April.
- India’s consumer price index-based retail inflation dropped to a low of 4.7% in April 2023 after 18 months, with urban areas experiencing a more pronounced dip in food inflation than rural ones.
- In April 2023, the general retail inflation rate in rural India dropped from 8.38% to 4.68%, while it dropped from 7.09% to 4.85% in urban regions.
- Based on information gathered from 1114 urban markets and 1181 villages throughout all states and union territories, the CPI is calculated.
- Core inflation, which does not include volatile food and fuel prices, dropped from 5.8% in March to 5.2% in April.