Retail inflation: India’s retail inflation rate (CPI) came down to 3.16 percent in April. This is the lowest level in the last six years. This rate was 3.34 percent in March. The main reason for this decline is further softening in the prices of food items. This is the third consecutive month when inflation has been below the target of 4% of the Reserve Bank of India.
43 economists involved in a survey by news agency Reuters had estimated that inflation rates could fall by 3.27% in April. However, inflation has decreased even more than expected by economists. A survey also revealed that the wholesale price -based (WPI) inflation could be reduced to 1.76% in April, which was 2.05% in March.
What caused inflation?
Despite the heat outbreak of summer, this time there has been a good crop, which has given relief to the common Indian families. Especially those families who spend a large part of their budget on food and drink. Food prices contribute about 50% to the Consumer Price Index (CPI).
What is expert’s opinion
“The real thing is that we are in April and now the summer months have started. Usually this season, the price of vegetables is seen,” IDFC First Bank Chief Economist Gaura Sengupta told Reuters.
Better monsoon estimate
Early monsoon prediction of more than average this year has raised hopes of better crop production and increase in rural demand. This is a lot of good news for a country like India, where the economy is largely dependent on agriculture.
Will RBI deduct interest rates?
The Reserve Bank of India (RBI) may have more scope to cut interest rates, which can support the slowing economy. RBI Governor Sanjay Malhotra announced the decision of the Monetary Policy Committee (MPC) last month, saying that there is a continuous decline in inflation, due to which the food prices are softened.
He also said that inflation may further decrease in FY 2025-26, which can provide relief to families who are constantly struggling with increasing costs. However, the central bank had also warned that it is cautious about global uncertainties.
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