India’s retail inflation eased to 3.16% in April, the lowest level in six years, down from 3.34% in March, driven mainly by a decline in food prices. This marks the third consecutive month inflation has remained below the Reserve Bank of India’s target of 4%. A Reuters poll had predicted inflation would fall to 3.27% in April.
Food inflation, which accounts for nearly half of the Consumer Price Index (CPI) basket, slowed to 1.78% in April from 2.69% in March. Despite intense heatwaves this summer, a strong harvest provided relief to Indian households, which spend a significant portion of their income on food. Rural inflation also cooled, dropping to 2.92% in April from 3.25% in March, while urban inflation decreased slightly to 3.36% from 3.43% in March.
The CPI-based inflation had been 3.34% in March and 4.83% in April 2024, highlighting the significant moderation in price pressures this year. The moderation in inflation comes as a positive signal for the Indian economy, indicating that price pressures are under control, which could provide room for further policy action by the Reserve Bank of India (RBI). Analysts expect the RBI to maintain its accommodative stance in the coming months, potentially supporting growth while ensuring inflation remains within the target range. The easing inflation also boosts consumer sentiment.
