India’s retail inflation eased slightly to touch an 11-month low of 4.83% on an annual basis in April 2024, as per government data released on Monday. This figure is marginally lower than the 4.85% recorded in the previous month, closely aligning with the Reuters poll forecast of 4.80%. Importantly, it remains within the Reserve Bank of India’s (RBI) tolerance band of 2-6%.

According to data from the National Statistical Office (NSO), the inflation in the food basket rose to 8.7% in April from 8.52% in March. Sequentially, the inflation rate stood at 0.48% in April 2024.

Breaking down the inflation rates for various commodities, vegetable inflation declined slightly to 27.80% year-on-year, while inflation rates for cereals and pulses were recorded at 8.63% and 16.84% respectively. Notably, the fuel and light inflation rate contracted by (-)4.24% in April 2024.

Among the top five groups, inflation rates for ‘Clothing & Footwear’, ‘Housing’, and ‘Fuel & light’ decreased compared to the previous month. For clothing & footwear and the housing sector, the inflation rate stood at 2.85% and 2.68% respectively.

Reserve Bank of India (RBI) Governor Shaktikanta Das, addressing the outcomes of the first bimonthly Monetary Policy Committee (MPC) meeting of FY25, emphasized inflation as a significant challenge. He expressed optimism, noting that inflation appears to be reverting to the desirable threshold of 4%.

Governor Das highlighted the downward trajectory of inflation, driven by favorable base effects, but also acknowledged persistent pressure from service prices. Despite a decline in headline inflation for January-February 2024 to 5.1%, uncertainties persist due to erratic movements in food prices.

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In February 2024, food inflation rose to 7.8%, influenced by vegetables, eggs, meat, and fish, while fuel prices continued a deflationary trend for the sixth consecutive month. The core Consumer Price Index (CPI), excluding food and fuel, witnessed disinflation, dropping to 3.4% in February.

In its April 2024 meeting, the MPC maintained its inflation forecast for the fiscal year at 4.5%, assuming normal monsoon conditions. However, concerns remain due to rising prices and supply chain disruptions caused by the Red Sea crisis, amidst an anticipated hot summer.

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