India's consumer price inflation eased to an 11-month low of 4.83 per cent in April, bringing more relief to household budgets, figures released by the Ministry of Statistics showed on Monday.
"Among the top five groups, the year-on-year inflation on 'Clothing & Footwear', 'Housing', and 'Fuel & light' has decreased since last month," the official data showed.
Retail inflation has now fallen closer to the RBI's mid-term target of 4 per cent after which the central bank would be in a position to cut key interest rates to make loans available at lower rates of interest to corporates and consumers to spur demand and accelerate economic growth.
Trends in Specific Expenditure Categories
The country's CPI inflation has been showing a declining trend in recent months as it fell to 4.85 per cent in March from 5.09 per cent in February, and 5.1 per cent in January this year. The declining trend in cooking oil prices continued in April with a 9.43 per cent fall during the month. The price rise in spices slowed to 11.4 per cent in March from 13.28 per cent in February.
The inflation in pulses also slowed 7.75 per cent during the month under review compared to 17.71 per cent in March. However, the data show that vegetable prices shot up by as much as 27.8 per cent in April, which remains a pain point for the consumers. The prices of cereals also increased by 8.63 per cent during the month under review.
The consumer price inflation is still above the RBI's mid-term target of 4 per cent and is the main reason why the central bank has not gone for a cut in interest rates to rev up growth. The RBI is keen to keep inflation under control to ensure stability and has held the repo rate steady at 6.5 per cent for seven times in a row in its bi-monthly monetary policy reviews.
Impact on Monetary Policy
The RBI stated in its monetary policy review on April 5 that it expects inflation to come down to 4.5 per cent in 2024-25, assuming a normal monsoon this year. Going forward, the inflation trajectory will be shaped by the evolving food inflation outlook. Rabi sowing has surpassed last year's level, while the usual seasonal correction in vegetable prices is continuing, though unevenly, the RBI said.
