India's retail inflation eased further to 4.83% in April 2024, down from 4.85% in March 2024, according to the latest data shared by the Ministry of Statistics & Programme Implementation (MoSPI). The CPI inflation for the months of January and February stood at 5.10% and 5.09%, respectively.

"The annual inflation rate based on all India Consumer Price Index (CPI) number is 4.83% (Provisional) for the month of April, 2024 (over April, 2023)," the ministry says, adding that corresponding inflation rates for rural and urban is 5.43% and 4.11%, respectively.

Among the top five groups, the year-on-year inflation on groups ‘clothing & footwear’, ‘housing’ and ‘fuel & light’ has decreased since last month. While inflation has come down significantly in the past few months, it remains above the 4% target.

Moreover, despite a fall in the CPI inflation, the food inflation in April 2024 surged to a four-month high at 8.70%, up from 8.52% in March 2024. The food inflation in rural areas rose to 8.75% in April from 8.55% in March, while in urban areas, the food inflation surged to 8.56% from 8.41%.

Assuming a normal monsoon, the RBI in its bi-monthly monetary policy committee (MPC) meeting last month had estimated the CPI inflation for 2024-25 at 4.5%, with Q1 at 4.9%, Q2 at 3.8%, Q3 at 4.6% and Q4 at 4.5%. RBI governor Shaktikanta Das said that inflation — the elephant in the room — had gone out for a walk and now appears to be returning to the forest.

"Two years ago, around this time, when CPI inflation had peaked at 7.8% in April 2022, the elephant in the room was inflation. The elephant has now gone out for a walk and appears to be returning to the forest," Das said announcing the monetary policy statement.

"We would like the elephant to return to the forest and remain there on a durable basis. In other words, it is essential, in the best interest of the economy, that CPI inflation continues to moderate and aligns to the target on a durable basis," Das said.

An estimate by the Centre for Monitoring the Indian Economy (CMIE) in March 2024 also said that the retail inflation will likely dip to 4.3-4.4% in the fiscal year 2024-25 compared to an estimated 5.4% in FY24.

The CMIE's forecast was slightly lower than the Reserve Bank of India’s (RBI’s) projection of 4.5% for FY25. The think tank attributed a normal supply of major vegetables, namely potatoes, onions, and tomatoes for a declining trend in inflation for 2024-25. "We have assumed that the prices of these commodities will not display too much volatility during the year. Fluctuations in vegetable supply in the current fiscal led to price fluctuations of the same. This led to a significant volatility in food inflation during the year. We assume the same will not be repeated in the upcoming fiscal," CMIE said.

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