Food perishables are expected to fall by a lesser extent than in March amidst a shift in weather conditions
With food prices further cooling down, retail inflation is expected to slow down to 3.2 per cent in April, economists say. If this happens, it would be the lowest print since July 2019.
The government will formally release the retail inflation number based on Consumer Price Index (CPI) on Tuesday. Headline retail inflation in March was 3.34 per cent in March. As the retail inflation number is below the median rate (4 per cent) of targeted inflation range (2-6 per cent), this could help the Monetary Policy Committee (MPC) cut the policy interest rate (better known as repo rate, the rate at which the Reserve Bank of India lends money to banks) for the third successive time, when it will meet next month.
According to Radhika Rao, Executive Director and Senior Economist at DBS Bank, April inflation is expected to remain below 4 per cent for the third successive month, slowing to 3.2 per cent y-o-y in April.
India Ratings & Research (Ind-Ra) too expects the retail inflation to have declined to 3.2 per cent in April, which would be the lowest since July 2019 due to sustained easing off of food inflation.
“Food perishables are expected to fall by a lesser extent than in March amidst a shift in weather conditions, though the sequential momentum is better contained than last year. Non-food pressures will be driven mainly by higher gold prices, whilst a pullback in global energy prices and a firmer currency keep imported pressures in check, said Rao while adding that she does not expect any spillover risk to inflation from recent geopolitical developments.
Some concerns
Food and beverages have maximum weight (over 54 per cent), price reduction in key items such as vegetables and cereals will affect the food inflation as well as overall headline number. Daily retail prices data from Consumer Affairs Ministry showed that tomato, onion, potato, pulses, and rice, decreased 34.2 per cent, 5.7 per cent, 11.3 per cent, 5.2 per cent and 4 per cent, respectively, in April. However, there are some concerns on edible oil prices, which curtail reduction in overall food inflation. A research report by Crisil said that vegetable oil prices surged 19 per cent due to a rise in import duty.
Meanwhile, gold and silver prices are expected to have some bearing on headline inflation. During April, gold prices touched nearly ₹1 lakh per 10 gm. Silver prices too rose to touch nearly ₹1 lakh a kg. These prices will impact core inflation (headline inflation minus food and fuel inflation), which is expected to maintain 4 per cent plus rate.
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Published on May 12, 2025
