India’s CPI inflation in April 2023 declined to its 18-month low of 4.7 per cent, according to the official data released on Friday. This is the second consecutive month for the retail inflation to come under the RBI’s tolerance limit of 4 per cent (+/- 2 per cent). However, the country’s industrial production based on IIP rises 1.1 per cent in March 2023, against 5.6 per cent in the preceding month.
According to the National Statistical Office, the retail inflation in urban areas eased to 4.85 per cent and in rural areas to 4.68 per cent.
The retail inflation based on Consumer Price Index (CPI) was 5.66 per cent in March 2023 and 7.79 per cent in the year-ago period. Retail inflation in April is the lowest since October 2021 when it was at 4.48 per cent.
According to the National Statistical Office, the inflation in the food basket was 3.84 per cent in April, as against 4.79 per cent in March and 8.31 per cent in the year-ago period.
Retail inflation rose from 5.7 per cent in December 2022 to 6.4 per cent in February 2023 on the back of higher prices of cereals, milk and fruits and slower deflation in vegetable prices.
Reserve Bank of India has projected the CPI inflation at 5.2 per cent for FY2023-24, with 5.1 per cent in Q1, 5.4 per cent in Q2, 5.4 per cent in Q3, and 5.2 per cent in Q4, and risks evenly balanced.
Suvodeep Rakshit, senior economist at Kotak Institutional Equities, said, “April CPI inflation at 4.7 per cent is in line with expectations and benefitted from a favourable base effect similar to the March inflation print. Food inflation has been coming off mostly on the back of deflation in oils and vegetables (with seasonal pick up in prices visible).”
He added that core inflation at 5.1 per cent continued to fall sharply primarily due to base effects with sequential increases remaining relatively elevated at 0.6 per cent month-on-month. Overall, the RBI will see this print favourably and remain on a pause in the June policy while maintaining a cautious outlook on inflation.
“We continue to pencil in repo rate to remain unchanged for an extended period subject to global growth prospects, central bank actions, and domestic growth prospects,” Rakshit added.
IIP Growth In March 2023
India’s industrial production rose 1.1 per cent in March, according to official data released on Friday. Factory output measured in terms of the Index of Industrial Production (IIP) grew 2.2 per cent in March 2022.
The data released by the National Statistical Office (NSO) showed that the manufacturing sector’s output increased 0.5 per cent in March 2023.
Mining output rose 6.8 per cent during the month under review. Power output declined by 1.6 in March. The IIP grew 5.1 per cent in 2022-23 as against a growth of 11.4 per cent in 2021-22.
(With PTI Inputs)
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