Retail Inflation At 5-Year Low May Pave Way For Rate Cuts: Experts
Both the rural and urban segments of the economy are witnessing softening of CPI inflation, with 2.92 per cent and 3.36 per cent in April
The easing of retail inflation in April is expected to further give comfort to the Reserve Bank of India (RBI) to reduce interest rates in its next bi-monthly MPC meeting, which will reduce industry debt burden, leading experts said on Tuesday.
CPI inflation for the month of April stood at 3.16 per cent (provisional).
“This is an 18 basis points decline in headline inflation of April 2025 in comparison to March 2025. However, it is the lowest year-on-year inflation after July 2019”, said Hemant Jain, President, PHDCCI.
The significant softening of CPI and food inflation last month is mainly attributed to decline in prices of vegetables, pulses and products, fruits, meat and fish, personal care and cereals, he added.
Both the rural and urban segments of the economy are witnessing softening of CPI inflation, with 2.92 per cent and 3.36 per cent in April in comparison to 5.43 per cent and 4.11 per cent, respectively in April.
“Going ahead, we expect food inflation to cool down further given the anticipation of a good monsoon. Further, the crude prices are expected to be range-bound between $60 to $65 per barrel in the short to medium term, further boosting private final consumption expenditure and, therefore, bolstering economic growth,” Jain added.
According to Dharmakirti Joshi, Chief Economist, Crisil Limited, the record rabi harvest and robust pulses output, as indicated by the Second Advance Estimates, combined with the forecast of a favourable monsoon for the upcoming kharif season, should keep food inflation in check.
“Given the current inflation trajectory, a further 25-basis point rate cut is expected in the June monetary policy review,” he mentioned.
The moderation is almost entirely food-led. Food inflation fell to 1.78 per cent, its weakest level in three-and-a-half years, as vegetables plunged -11 per cent YoY, pulses -5.2 per cent and cereal inflation eased to 5.35 per cent from 5.93 per cent.
“The data now anchor headline inflation around 3 per cent for the next two months, with food prices cushioned by ample stocks and an above-normal-monsoon forecast, and core categories capped by subdued wage-cost pass-through,” said Arsh Mogre, Economist, PL Capital.
(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)
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