Retail inflation jumped to a six-month high of 2.92 per cent in April because of a spike in food prices, but remained below the Reserve Bank of India’s target of 4 per cent.
Economists said the RBI may not raise rates at its monetary policy committee meeting next month. Conditions for a cut have been created by the sub-3 per cent inflation and a fall in industrial growth rate. But the apex bank is likely to consider the forecasts for the monsoon, the new government’s fiscal strategy and crude oil before cutting rates.
Inflation based on the consumer price index (CPI) was lower at 2.86 per cent in March, but much higher at 4.58 per cent in April 2018.
Food inflation for the month was higher at 1.1 per cent against 0.3 per cent in March. Vegetables inflation rose to 2.87 per cent compared with a negative 1.49 per cent in March.
Cereals inflation was at 1.17 per cent compared with 1.25 per cent a month ago; and pulses inflation was at a negative 0.89 per cent against a negative 2.25 per cent in March.
“A significant deceleration in inflation for clothing and footwear and miscellaneous components has reduced core inflation from 5.06 per cent in March to 4.57 per cent in April. This reflects severe demand slowdown,” Rupa Rege Nitsure, chief economist at L&T Financial Holdings, said.
She said the contraction of industrial output had opened up space for monetary easing in June.
Fuel trend
Fuel and light inflation expanded marginally to 2.56 per cent compared with 2.42 percent in March. Housing inflation was down to 4.76 per cent against 4.93 per cent a month earlier.
Clothing & footwear prices were higher by 2.01 per cent compared with 2.59 per cent in March.