E-Paper
Retail inflation at 11-month low, but food prices surge
The Consumer Price Index has stayed within the RBI’s “tolerance range” of 4% (+/-2%) since September 2023
NEW DELHI: India’s consumer inflation eased to an 11-month low of 4.83% in April from a year ago, marginally lower than 4.85% in the previous month, but food prices surged to a four-month high, according to data released by the ministry of statistics and programme implementation on Monday.
The Consumer Price Index has stayed within the Reserve Bank of India’s (RBI) “tolerance range” of 4% (+/-2%) since September 2023. However, food inflation continued to be elevated in April and well above the central bank’s tolerable limit at 8.70%, compared to a rise of 8.5% in March, which remains a worry for policymakers and households alike.
On April 5, RBI’s monetary policy committee, citing risks from food prices, decided to keep the policy repo rate unchanged at 6.50%, the seventh time that the rate had been kept steady.
Even though overall prices have moderated, RBI has said that the task of reining in inflation was not over.
“The Monetary Policy Committee (MPC) remains focused on aligning inflation to the target on a durable basis. We derive satisfaction from the progress made under disinflation. But the task is not yet finished,” RBI Governor Shaktikanta Das said at a press conference on April 4.
Prices of basic staples and other food items remained elevated despite a range of measures, including a ban on the export of rice, wheat and sugar.
On May 4, the government lifted its ban on overseas shipments of onions as officials cited normal availability, stable prices and robust output from the rabi or winter-sown crop, a move that will benefit traders and farmers of poll-bound Maharashtra, the country’s biggest producer of the vegetable.
Simultaneously, the country imposed a minimum export price (MEP) of $550 per tonne plus 40% tariff on outbound onion shipments. MEP is a floor price below which traders can’t export. It’s a regulatory tool designed to discourage too much exports at cheap rates.
Among major food categories, cereal prices stood at 8.63% in April from a year ago, higher than 8.4% in March. Vegetables rose 27.8% compared to a rise of 28.3% in the previous month.
Inflation in pulses, the commonest source of protein for most Indians, rose 16.84% in April from a year ago compared to a 17.7% increase in March.
For the second straight month, rural households saw a higher uptick in prices at 5.43%, while the retail inflation rate in urban areas remained nearly steady at 4.11% in April.
RBI has forecast that retail inflation would ease to an average of 4.5% this year, down from 5.4% in 2023-24.
