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India's inflation slows to lowest in nearly 6 years, making room for more rate cuts
Annual retail inflation slowed to 3.16 percent in April from 3.34 percent in March.
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Reuters - Tue, 13, May 2025
- 22:51 EDT
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Customers buy fruits and vegetables at an open air evening market in Ahmedabad, India, August 21, 2023. / REUTERS/Amit Dave/File Photo
India's retail inflation remained below the central bank's 4 percent target for the third consecutive month as food prices rose at a slower pace, opening up room for more interest rate cuts to support growth in the world's fifth-largest economy.
Annual retail inflation slowed to 3.16 percent in April from 3.34 percent in March, marking its lowest level since July 2019 and coming in below economists' estimate of 3.27 percent in a Reuters poll.
Inflation in food prices - which accounts for nearly half of the consumption basket - slowed to 1.78 percent from 2.69 percent in March, its lowest since October 2021.
Vegetable prices continued their downward trend, falling 11 percent year-on-year, compared to a 7.04 percent fall in March.
"The CPI (consumer price index) print today sets the stage for another rate cut by the RBI in its June policy of 25 basis points," said Sakshi Gupta, an economist at HDFC Bank.
Last month, the Reserve Bank of India (RBI) lowered its key policy rate for a second consecutive time, and signalled more cuts by changing its monetary policy stance to 'accommodative' from 'neutral'.
It cut its GDP growth estimate for the ongoing fiscal year to 6.5 percent from 6.7 percent and said it sees inflation at 4 percent, compared to 4.2 percent earlier.
Prices of cereals rose 5.35 percent against a 5.93 percent increase in March, while those of pulses fell 5.23 percent compared to a 2.73 percent fall in the same period.
Core inflation, which excludes volatile items such as food and energy and is a better gauge of domestic demand, steadied at 4 percent - 4.1 percent in April from 4.1 percent in the previous month, according to two economists.
"We expect the retail inflation to remain in the range of 3.6% to 3.8% during April-June period on the expectations of a normal monsoon," said Rajni Thakur, an economist at L&T Finance.
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