Food inflation during April was largely attributable to a decline in the inflation rates of vegetables, pulses & products,
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India’s retail inflation based on Consumer Price Index (CPI) continued its downward trend, reaching 3.16 per cent in April – the lowest level since July 2019 – primarily due to a softening in food product prices, the government reported on Tuesday. This marks a further decrease from the 3.34 per cent recorded in March.
According to a statement from the Ministry of Statistics and Programme Implementation, the significant easing in both headline and food inflation during April was largely attributable to a decline in the inflation rates of vegetables, pulses & products, fruits, meat and fish, personal care and effects, and cereals and products.
Food inflation
Food inflation for April stood at a low 1.78 per cent, reflecting a substantial 91 basis points drop compared to March. This is the lowest food inflation figure since October 2021. Notably, rural areas experienced a sharper decline in headline inflation, falling to 2.92 per cent in April from 3.25 per cent in March. Urban headline inflation also eased, reaching 3.36 per cent in April compared to 3.43 per cent in the previous month.
Experts anticipate that continued low food inflation will likely keep the headline inflation around the 3 per cent mark in the coming 2-3 months. However, caution remains. Dharmakirti Joshi, Chief Economist at Crisil, emphasised that agricultural performance is contingent on both the quantum and distribution of rainfall, and that the increasing frequency of heatwaves poses a growing risk to agricultural productivity and consequently, food inflation, warranting close monitoring.
Barclays projects inflation to remain near 3 per cent in May, resulting in an average CPI of around 3-3.1 per cent for the April-June (Q1) period, significantly below the Monetary Policy Committee’s (MPC) forecast of 3.6 per cent.
Given this substantial undershoot in Q1 (following a similar trend in Q4 FY24-25), Barclays expects the MPC to implement a third consecutive 25 basis point cut to the policy repo rate on June 6, advancing their previous expectation from the August meeting. They also see potential downside risks to their full-year CPI inflation estimate of 4 per cent for FY25-26.
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Published on May 13, 2025
