(HT)
Indian consumer inflation likely eased to a near six-year low in April after a further moderation of food price rises, keeping it below the Reserve Bank of India’s 4% medium-term target for a third straight month, a Reuters poll of economists found.
Intense heatwaves this summer did little to affect a robust harvest, offering much-needed relief to many Indian households which allocate a significant portion of their budgets to food.
Food prices account for nearly half of the consumer price basket.
The May 5-8 Reuters poll of 43 economists suggested inflation as measured by the annual change in the consumer price index (CPI) fell to 3.27% in April from 3.34% in March.
Forecasts for the inflation data, set to be released on May 12 at 1030 GMT, ranged from 2.8% to 4.0%.
Survey medians suggested prices rose at the slowest pace since mid-2019 last month.
“The slight decline we will see is because food inflation continues to ease on a month-on-month basis. Vegetable prices, pulses, cereals … even fruits declined,” Gaura Sengupta, chief economist at IDFC First Bank, said.
“The fact is we are in April, and you’re entering the summer months. The expectation is seasonally you should see a pick-up in vegetable prices, but for now we’re not seeing that.”
A separate Reuters poll conducted last month suggested inflation would average 4.0% this fiscal year, in line with the RBI’s projection.
Meanwhile, the price of gold – a prized commodity in India – rose around 5.0% in April as investors sought a safe haven from global trade tensions, offsetting the sharp slowdown in headline inflation observed over the past few months.
With inflation predicted to stay subdued, the RBI has more room to cut interest rates to support a slowing economy.
Early predictions of above-average monsoon rains this year have raised expectations of stronger agricultural output and higher rural demand in a largely agriculture-dependent economy.
Core inflation, which excludes volatile items such as food and energy and is a better gauge of domestic demand, was expected to have moderated to 4.0% year-on-year in April, down from the 4.1% estimated by economists in a April survey, the latest poll found.
The Indian statistics agency does not publish core inflation data. Wholesale price index-based inflation is expected to have eased to 1.76% last month, down from 2.05% in March, the survey also showed.
