(HT)
Retail inflation eased to a nearly six-year low of 3.16% in April mainly due to subdued prices of vegetables, fruits, pulses, and other protein-rich items, creating enough room for the Reserve Bank to go for another round of rate cut in the June monetary policy review.
The Consumer Price Index (CPI) based inflation was 3.34% in March and 4.83% in April 2024. It was 3.15% in July 2019.
NSO data showed a sharp decline of 91 basis points in food inflation in April 2025 in comparison to March 2025. The food inflation in April 2025 is the lowest since October 2021.
Food inflation in April was 1.78%, lower than 2.69% in the preceding month and 8.7% in the year-ago month, showed data released by the National Statistics Office (NSO) on Tuesday.
The Reserve Bank, which has been mandated to ensure inflation remains at 4% with a margin of 2% on either side, has slashed the key interest rate by 50 basis points in two tranches (February and April) as the price situation improved.
The central bank has projected the CPI inflation for the financial year 2025-26 at 4%, with Q1 at 3.6%; Q2 at 3.9%; Q3 at 3.8%; and Q4 at 4.4%.
“The significant decline in headline inflation and food inflation during the month of April 2025 is mainly attributed to decline in inflation of vegetables, pulses and products, fruits, meat and fish, personal care and effects and cereals and products,” NSO said.
There was a deflation in potato (12.7%), tomato (33.21%), chicken (6.78%) arhar (14.27%), and jeera (20.79%) during April on annual basis.
During April, inflation in mustard oil was at 19.6%, refined oil (sunflower, soyabean) at 23.75%, apple at 17%, and onion at 2.94%.
The rural inflation was at 2.92% in April 2025 compared to 3.25% in the preceding month 2025.
Urban inflation declined marginally from 3.43% in March 2025 to 3.36% in April.
According to the data, the highest inflation was in Kerala at 5.94% while the lowest was in Telangana at 1.26%.
Commenting on inflation data, Aditi Nayar, chief economist, Icra Limited, said that average inflation is at 3.5% in FY2026, with the prints for Q2 and Q3 sharply trailing the RBI’s Monetary Policy Committee (MPC) projections for these quarters, allowing for an additional 75 bps of rate cuts in this calendar year.
“A 25 bps rate cut appears forthcoming in the June 2025 policy, followed by easing of 25 bps each in the August and October 2025 policy reviews. If the GDP growth print for Q4 FY2025 does not report an acceleration from the 6.2% seen for Q3 FY2025, the MPC may consider frontloading the rate easing, with a 50 bps cut in the upcoming review,” Nayar said.
Year-on-year fuel and light inflation rate for April was 2.92% as against 1.42% in March.
Inflation in ‘Transport and Communication’ segment was higher at 3.73% in April compared to 3.36% in March.
