In March, retail inflation stood at 3.34 per cent- the lowest since August 2019
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The National Statistics Office (NSO) will release the April CPI data on Monday.
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Consumer price index (CPI)-based retail inflation is likely to have cooled further in April, remaining below the 4 per cent target of the Reserve Bank of India (RBI) for the third consecutive month.
The decline in inflation is expected on account of easing prices across various goods categories, especially food items.
This potentially opens another window for the RBI’s monetary policy committee (MPC) to consider further repo rate cuts in its upcoming bi-monthly review meeting in June.
In March, retail inflation stood at 3.34 per cent — the lowest since August 2019.
The National Statistics Office (NSO) will release the April CPI data on Monday.
The RBI, in its last bi-monthly meeting in April, had projected CPI inflation for the current financial year at 4 per cent, with Q1 (April-June) inflation touching as low as 3.6 per cent.
Madan Sabnavis, chief economist at Bank of Baroda, said that retail inflation is expected to come in at 3 per cent, with broader comfort being provided by food inflation.
This print will give further breather to RBI in its June policy for further easing.
“The once perceived pain point of food inflation, especially the volatile tomato, onion and potato (TOP) prices, is hand holding the CPI at the current juncture, with supply dynamics still titled in favour of a lower inflation print. The heatwave conditions have also subsided in major TOP producing states. This comes as a relief against anticipation of the hotter-than-usual summer and gives a further sigh of relief to inflation,” he added.
Echoing similar views, Paras Jasrai, senior economic analyst, India Ratings, said that the retail inflation is expected to have slid to 3.2 per cent in April. This comes as the outlook for food inflation is largely positive in the near term.
“However, the core inflation is slightly building up with the headline print estimated to be around 4 per cent in April. A supportive commodity price cycle, which has shown a sharp decline in prices across major energy, metals and agriculture commodity baskets, will keep it in check,” he added.
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Earlier in April, the MPC slashed the policy repo rate by 25 bps to 6 per cent, marking the second consecutive reduction in policy rate.
Addressing the customary post-policy review press conference, RBI Governor Sanjay Malhotra said the outlook for food inflation has turned decisively positive and the uncertainties regarding rabi crops have abated considerably.
Also, the second advance estimates point to a record wheat production and higher production of key pulses over that last year.
“Along with robust kharif arrivals, this is expected to set the stage for a durable softening of food inflation. Furthermore, the fall in crude oil prices augurs well for the inflation outlook,” he added.
However, risks to the retail inflation cooling down remain.
Sabnavis added that the fine print of food inflation needs vigilance, as for tomatoes, there is also a slight reversal in retail price.
International gold prices are also witnessing a sharp increase amid safe-haven demand in the ongoing tariff turmoil.
SIGNS OF RELIEF
* Low inflation opens window for RBI to consider further repo rate cuts in June
* March retail inflation was 3.34%, the lowest since August 2019
* Food inflation, including TOP prices, is currently supporting lower CPI
* Heatwave subsided in TOP-producing states, offering relief from inflation
* Commodity prices may keep core inflation in check
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