Inflation falls to 4.25% in India, in May

New Delhi, Jun 13: India's consumer price index (CPI)-based inflation fell to 4.25 percent in May, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed on Monday. In the month of April, the retail inflation was 4.7 percent. The food inflation also eased to 2.91 percent in April. It was 3.84 percent in the month of April.

 

 

 

April's inflation numbers were the lowest in 18 months. It was for the second month in a row that retail inflation remained within the Reserve Bank of India's (RBI)'s comfort zone of below six percent.

 

 

 

The RBI has projected the CPI-based inflation at 5.2 percent for FY24, with 5.1 percent in Q1, 5.4 percent in Q2, 5.4 percent in Q3, and 5.2 percent in Q4, and risks evenly balanced. Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities said, "May CPI-based inflation at 4.25 percent was lower than expectations and benefitted from a favourable base effect as well as a further fall in food inflation. Food inflation benefitted from a sequential fall in prices of fruits and oils even as prices of eggs, meat, milk, vegetables, and pulses continued to increase partly reflecting seasonal impact too." Rajani Sinha, Chief Economist, CareEdge Ratings said, "The CPI-based inflation came broadly on expected lines supported by a favourable base and softer increase in food prices. Despite the moderation, cereals inflation continued in double digits whereas,milk, pulses, sugar and spice inflation firmed due to limited supply. Going ahead, a marginal uptick in inflation print could be seen as the support from favourable base wanes". The Index of Industrial Production (IIP) rose 4.2 percent in April, compared with 1.1 percent in March. Power generation declined 1.1 percent in April 2023 compared to a growth of 11.8 percent. Mining output, however, rose by 5.1 percent during the month under review against a growth of 8.4 in the year-ago period. According use-based classification, the capital goods segment recorded a 6.2 percent growth in April compared to a 12 percent expansion a year ago.

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"Industrial output surprised on the upside with a 4.2 percent growth in April, rebounding from subdued growth in the previous month. The improvement in manufacturing sector and robust growth in the construction sector is encouraging. However, the continued weakness in external demand remains concerning, as reflected in the muted performance of export-intensive sectors such as textiles, wearing apparel, leather & related products", Sinha further said.