Retail inflation in April softened further and fell to a four-month low of 4.87 per cent as prices of food items, vegetables and fruits turned cheaper.
The retail inflation measured on the basis of Consumer Price Index (CPI) was revised upwards to 5.25 per cent from 5.17 per cent in March 2015.
Fall in food inflation was mainly driven by fruits, vegetables, milk and related products.
Food inflation, based on Consumer Food Price Index, fell to 5.11 per cent during the month from 6.14 per cent in March.
Prices of fruits and vegetables increased at a slower pace in April with inflation standing at 5.08 per cent and 6.63 per cent, respectively.
The rate of price rise in cereals and products was slower than a month ago at 2.15 per cent, while inflation in milk and its products was at 8.21 per cent.
While, the rate of price rise in most of the protein rich items remained higher in April with inflation in ‘meat and fish’ category at 5.5 per cent and ‘pulses and products’ at 12.52 per cent.
Egg prices continued a downward trajectory with inflation at (-)1.46 per cent in April.
However, the rate of price fall was slower than previous month’s (-)3.47 per cent.
Among others, inflation in oils and fats category fell to 1.77 per cent in April, sugar and confectionery at (-)5.99 per cent, spices (8.70 per cent) and in non-alcoholic beverages it was 4.68 per cent.
Inflation in prepared meals, snacks and sweets category rose to 7.68 per cent.
Of other items calculated under CPI, inflation in clothing and footwear category came down to 6.15 per cent, housing at 4.65 per cent and food and beverages at 5.36 per cent, respectively.
India’s consumer price inflation eased to a four-month low of 4.87 percent in April, while the annual industrial output growth slowed to 2.1 percent in March, government data showed on Tuesday.
Below are comments from analysts on the data:
RUPA REGE NITSURE, GROUP CHIEF ECONOMIST, L&T FINANCIAL SERVICES, MUMBAI
“Both the industrial production growth and CPI inflation numbers are showing a huge disconnect from the leading indicators.
“Food price data from the Ministry of Consumer Affairs shows a sequential increase in prices of cereals, sugar, milk, edible oils, etc. But somehow this is not reflected in the actual retail inflation.
“A sharp decline in core inflation and favourable base have contributed to CPI moderation. One thing is for sure: growth has weakened considerably and the government somehow has to find out radical measures to move investment sentiment.”
ASHISH VAIDYA, HEAD OF TRADING, ASSET LIABILITY MANAGEMENT, DBS, MUMBAI
“With inflation coming lower and IIP (industrial output) also a little low, chances of rate cut in June have increased.
“The fears of pre-monsoon showers on food inflation is not coming through as food supply has been managed quite well.
“The fact that there is hardly any credit growth and both inflation and IIP are benign make a case for cutting rates. Markets will move in a 3-5 basis points range this week but going ahead to June sentiment will turn positive on expectations of a rate cut.”
KILLOL PANDYA, SENIOR FUND MANAGER, LIC NOMURA MF ASSET MANAGEMENT, MUMBAI
“The inflation number is welcome. We wanted to see the continuation of softening of inflation. That is the only good thing going for bond markets.
“We can expect a rate cut sometime in June. If RBI wants to lower rates before inflation catches up due to monsoon-related risks then June is the time.”
R. SIVAKUMAR, HEAD OF FIXED INCOME FOR AXIS ASSET MANAGEMENT, MUMBAI
“The larger message is the trend of falling inflation would continue.
“Bond yields are unlikely to react. The reason for RBI’s pause after two rate cuts this year is a possible hike in rates by U.S. Federal Reserve.”