Retail inflation falls to 18-mth low of 4.7%

New Delhi: Retail inflation declined to an 18-month low of 4.7 per cent in April mainly due to falling prices of vegetables, oils and fats, and came closer to Reserve Bank’s target of 4 per cent, showed government data released Friday. It was for the second month in a row that Consumer Price Index (CPI) based inflation remained within the RBI’s comfort zone of below 6 per cent.

The government has tasked the central bank to ensure retail inflation remains at 4 per cent with a margin of 2 per cent on either side. The retail inflation was 5.66 per cent in March 2023 and 7.79 per cent in the year-ago period. Later month’s inflation is the lowest reading since October 2021, when it stood 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. The food basket accounts for nearly half of the CPI. 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.

As per the latest NSO data, prices of ‘oil and fats’ declined by 12.33 per cent, followed by vegetables (6.5 per cent), and ‘meat and fish (1.23 per cent) during April on an annual basis. On the other hand, spices, cereals and products, and ‘milk and milk products’ became dearer.

Commenting on the data, Aditi Nayar, Chief Economist, Head - Research & Outreach, ICRA said the April 2023 CPI inflation eased to an 18-month low, benefitting from the high base as well as cooler than normal temperatures, which delayed the seasonal rise in prices of perishable items.