Retail Inflation Relaxes To A Year Low of 4.75% In May

As per the data from the Ministry of Statistics and Programme Implementation on June 12, it is noted that the retail inflation of India dropped to 4.75%  in May 2024. The Consumer Price Index (CPI) inflation was 4.83% in the month of April. This rate remained below 5% for three months in a row with the lowest point since May 2023 when it was 4.31%.

The Consumer Price Food Index (CPFI) was nearly unchanged at 8.69 percent, compared to 8.7 percent in April.

The Reserve Bank of India (RBI), in its recent policy review, kept its FY25 inflation projection at 4.5 percent but warned that food prices might stay high.

The drop in overall inflation was partly due to a 3.83 percent decrease in the fuel and light category in May, though at a slower pace than in April. Meanwhile, food and beverages inflation remained steady at 7.87 percent in May, the same as in April.

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“The headline CPI inflation unexpectedly dropped to a 12-month low of 4.75 percent in May 2024 from 4.83 percent in April 2024. All sub-groups except fuel and light either softened or stayed the same compared to the previous month. This was better than expected (ICRA’s forecast was 5.0 percent) mainly because of a lower-than-anticipated figure for food and beverages,” said Aditi Nayar, Chief Economist at ICRA.

However, the growth in the Index of Industrial Production (IIP) slowed to 5 percent in April, the lowest in three months, down from 5.4 percent in March.