Food inflation in April stood at 8.64%, down from 9.90% in the previous month, primarily because of sharp drop in vegetable prices, data released Thursday showed. Manufactured products inflation, however, remained sticky at 3.15% against 3.23% in March, not a good sign in a slowdown year when demand is expected to be subdued.
Output for consumer goods has been contracting and firms aren’t quite adding capacity lines to cater to rising demand.
Retail inflation rose to a three-month high of 8.59% in April while industrial output fell 0.5% in March,
High inflation is also likely to dash hopes of a rate cut by the Reserve Bank of India (RBI) that presents its credit policy review next month.Finance secretary Arvind Mayaram said the government would have to remain cautious about the impact of monsoon.
"We believe we need to be cautious and alert. But we have adequate stocks of foodgrains to meet any eventuality. I do not believe that a slightly sluggish monsoon is going to really impact the supply chain in a manner that will be disruptive."