Retail inflation in India fell to an 18-month low of 4.7% in April, according to government data released on Friday. This was mainly due to lower prices of vegetables, oils and fats. The Consumer Price Index (CPI) has remained within the Reserve Bank of India’s comfort zone of below 6% for the second month in a row. The government has set a target of 4% for retail inflation with a margin of 2% on either side. Inflation in the food basket was 3.84% in April, accounting for nearly half of the CPI.
The decline in retail inflation can be attributed to a fall in the prices of ‘oil and fats’, vegetables, and ‘meat and fish’ by 12.33%, 6.5%, and 1.23%, respectively, on an annual basis. However, prices of spices, cereals and products, and ‘milk and milk products’ increased during the same period. The April 2023 CPI inflation eased due to cooler than normal temperatures, which delayed the seasonal rise in prices of perishable items.
This is good news for India’s economy as lower inflation means lower interest rates, which can boost economic growth.
