India's CPI Inflation Falls To 25-Month Low In May
The consumer price index-based inflation stood at 4.25% in May, as compared with 4.7% in April.
India's retail inflation cooled to its lowest since April 2021, falling within the central bank's target range for the third straight month.
The Consumer Price Index-based inflation stood at 4.25% in May, as compared with 4.7% in April, according to data from the Ministry of Statistics and Programme Implementation on Monday. A panel of 37 economists polled by Bloomberg had estimated a reading of 4.31% for May.
Food and beverage inflation stood at 3.29% in May, down from 4.22% in April.
Core inflation fell to 5.11% in May, as compared with 5.3% in April.
Consumer price inflation has continued to ease through 2023, falling within the central bank's target range of 4 (+/- 2)% in March.
"Headline inflation, however, is still above the target as per the latest data and is expected to remain so according to our projections for 2023–24," RBI Governor Shaktikanta Das said last week.
May CPI inflation was lower than expected and benefited from a favourable base effect as well as further fall in food inflation, said Suvodeep Rakshit, senior economist at Kotak Institutional Equities.
Food inflation benefited from a sequential fall in prices of fruits and oils, even as prices of eggs, meat, milk, vegetables, and pulses continued to increase partly reflecting seasonal impact as well, he said.
Overall, the RBI will see this print favourably as it remains within its estimates, according to Rakshit. However, it will remain on an extended pause as it watches for the monsoon out-turn and the impact on prices, he said.
"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.”
Inflation Internals
Cereal prices rose 12.65% in May, as compared with 13.67% in April.
Inflation in meat and fish fell 1.3%, as against a decline of 1.23% last month.
Inflation in eggs was 6.7% vs. 3.1% last month.
Inflation in milk and milk products was 8.9% as compared with 8.85% in the previous month.
Prices of oils and fats declined 16%, against a fall of 12.3% in April.
Vegetable prices declined 8.2%, against a fall of 6.5% in the previous month.
Pulses inflation was at 6.6%, as compared with 5.28% in the preceding month.
Clothing and footwear inflation was at 6.6% versus 7.5% a month earlier.
Housing inflation rose 4.8% as against 4.91% in the previous month.
Fuel and light inflation stood at 4.6% in May as compared with 5.52% in April.