India's retail inflation measured in terms of Consumer Price Index (CPI) has eased to 4.70 per cent in the month of April, recent data released by the National Statistical Office (NSO) on Friday showed. This is the second month in a row that the inflation has remained within the tolerance band of 2-6 per cent of the RBI after going beyond 6 per cent in February and then coming to 5.66 per cent in March, data released by the Ministry showed. 

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The fall in the inflation number can be attributed to moderation in food and fuel prices apart from the low base effect. The easing price of cereals and vegetables in addition with lower energy prices has also pulled back the inflationary trend.

"The latest CPI print was helped largely by a favourable base. This support will remain through the entire H1FY24. However there might be other factors that may pose upside risks to inflation. Milk prices may get impacted by demand-supply concerns and fodder prices. Vegetable index may put upward pressure in H1. Further, actual amount of rainfall in the coming months will decide whether food inflation will remain in check or not," said Sonal Badhan, Economist at Bank of Baroda. 

Economists believed that considering the inflation rate under control, it is unlikely that the Reserve Bank of India (RBI) will change the repo rate in the upcoming meeting. Economists said that they do not expect the Reserve Bank of India to resume rate hike. At the same time, they also stressed on the fact that they do not expect any rate cut over the next 12 months.

"We expect significantly lower inflation in the next month too. Yet, the decline in inflation is exclusively on account of the extremely favourable base effect. On a month-over-month basis, inflation has gone up substantially for food. The sharp fall in the conventionally reported core inflation number might rejoice. But if the core inflation is calculated after excluding petrol and diesel (from the transportation category), the rate still remains close to 6 per cent," said Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers.

 

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Also Read: India’s retail inflation drops to 4.70% in April, stays within RBI’s tolerance band for second consecutive month