Retail Inflation at 12-month lowest to 4.75% in May
Retail inflation in India fell to a 12-month low of 4.75% on an annual basis in May, from 4.83% in April, according to official statistics released Wednesday.
This figure is lower than most economists expected. Since September 2023, retail inflation has remained within the RBI‘s target range of 2-6%.
“Year-on-year inflation rate based on the all-India Consumer Price Index (CPI) number is 4.75% (Provisional) for May 2024. Corresponding inflation rates for rural and urban areas are 5.28% and 4.15%, respectively,” stated the data released by the government.
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Notably, inflation in the spices category has decreased significantly year on year as compared to April 2024.
Inflation in ‘Clothing & Footwear,’ ‘Housing,’ and ‘Miscellaneous’ has all reduced since last month.
Core inflation at an all-time low of 2.97%
Core inflation, which excludes volatile components such as food and fuel, is now at an all-time low of 2.97 percent, reflecting some demand imbalances and gaps in the economy, according to Emkay Global’s lead economist Madhavi Arora.
However, the Consumer Price Food Index or CPFI remained almost flat at 8.69 percent versus 8.7 percent a month ago.
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The headline inflation rate’s downward trend was aided in part by a 3.83 percent drop in the fuel and light category in May, albeit at a slower rate than a month earlier.
In contrast, food and beverage inflation stayed unchanged at 7.87 percent last month compared to April.
“The headline CPI inflation unexpectedly eased to a 12-month low of 4.75% in May 2024 from 4.83 percent in April 2024, as all sub-groups barring fuel and light either witnessed a softening or remained unchanged as compared to the previous month. The better-than-expected reading (ICRA’s forecast:+5.0 percent) was largely driven by a lower-than-anticipated print for the food and beverages group,” said Aditi Nayar, Chief Economist, at ICRA.
