India's Retail Inflation Marginally Eases to 4.83 Percent in April, NSO Data Shows

New Delhi: Staying within the central bank’s tolerance range, India’s consumer price-based retail inflation rate eased marginally to 4.83 per cent in April on an annual basis from 4.85 per cent in March this year. The April data, however, witnessed that despite slight increase in the prices of food baskets, some kitchen items showed a decline to some extent in the same month. Besides, the inflation on clothing & footwear, housing and fuel & light among the top five groups has also decreased since last month, the government data showed on Monday.

The central government has tasked the Reserve Bank of India (RBI) to ensure inflation remains at 4 per cent, with a margin of 2 per cent on either side. As per the RBI, which factors in consumer inflation while arriving at its bi-monthly monetary policy, food price uncertainties continue to weigh on the inflation trajectory going forward.

As per the data released by the National Statistical Office (NSO), inflation in the food basket was at 8.70 per cent in April, marginally up from 8.52 per cent in March. “The overall retail inflation for the months of January, February and March 2024 are 5.10 per cent, 5.09 per cent and 4.85 percent respectively,” the NSO data showed.

“However, the gap between urban and rural consumers’ inflation experience remained sharp for the second successive month with rural households seeing a 5.43 per cent rise in prices, while the overall inflation rate faced by urban consumers remained virtually unchanged from 4.14 per cent in March to 4.11 per cent in April,” the data showed.

Reacting to the data, economists and analysts believe that the moderation was led by a larger deflation in the fuel and light segment, and softer prints for the clothing and footwear, and pan, tobacco and intoxicants groups among others. “The headline CPI inflation print dipped marginally to an 11-month low of 4.8 per cent in April 2024 from 4.9 per cent in March 2024, while printing in line with our projection,” said Aditi Nayar, chief economist, head (research and outreach) of ICRA Ltd.

“Inflation in the food and beverages group inched up to 7.9 per cent in April 2024 from 7.7 per cent in March 2024, although this was not broad-based, and was led by higher prints across just four of the 12 sub-groups, namely cereals, meat and fish, oils and fats, and fruits. Inflation in the vegetables and pulses categories remained in double-digits for the sixth and eleventh consecutive month, respectively, thereby contributing to the elevated food and beverages print,” Nayar said.

“Disinflation in non-food categories, led by lower fuel components, helped to offset a still elevated 8.7 per cent rise in food inflation. While food was likely underpinned by higher perishables, fuel inflation benefited from reduction in retail prices. May inflation is tracking close to 5.0-5.1 per cent on firmer food. For the central bank, strong growth prospects alongside lower core (below 3.3 per cent) and contained inflationary expectations will continue to keep policy in a comfortable hold in the first half of the fiscal year,” said Radhika Rao, executive director and senior economist of DBS Bank.