Retail inflation News

The RBI now expects inflation to remain below or near target throughout the year, with CPI projections set at 2.9 per cent for Q1, 3.4 per cent for Q2, 3.9 per cent for Q3, and 4.4 per cent for Q4.

Food Inflation declined to 0.99 per cent during May, which is the lowest since October 2021. This is the seventh month in a row that food inflation has registered a decline as the agricultural output has been on the rise.

The rally was led by banking stocks, with the Nifty Bank index climbing over 1.5 per cent to close at 56,578.40, also touching a new all-time high of 56,695 during the week.

Besides, under the Price Stabilisation Fund, a dynamic buffer stock of pulses is maintained and calibrated release of stocks from the buffer is done to ensure the availability and affordability of pulses to consumers.  

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.

The steady decline in retail inflation over recent years marks a crucial milestone in India’s economic journey, reflecting the success of coordinated efforts by the government.

The RBI Governor observed that along with robust kharif arrivals, this is expected to set the stage for a durable softening of food inflation. 

Food inflation in February dropped to its lowest level since May 2023, falling 222 basis points compared to January, as per official data. 

Stock Market Outlook: Nifty Metal surged by 8.61 per cent, Nifty Media railed 7.36 per cent, Nifty PSE increased by 7.36 per cent, and Nifty Energy gave a return of 5.90 per cent.

The Consumer Price Index (CPI)-based retail inflation was 5.22 per cent in December, and 5.1 per cent in January 2024.

The RBI during its last policy review slashed the cash reserve ratio (CRR) for banks by 0.5 per cent to make more funds available for lending to spur economic growth but kept the key policy repo rate unchanged at 6.5 per cent with an eye on inflation. 

Last week, the Reserve Bank revised its inflation forecast for the current fiscal year, raising it to 4.8 per cent from the previous estimate of 4.5 per cent. 

The government has tasked the Reserve Bank of India to ensure that consumer price index (CPI) based retail inflation at 4 per cent with a tolerance band of +/- 2 per cent around it.

The year-on-year inflation rate (3.65 per cent), based on the All India Consumer Price Index (CPI), for the month of August was the second lowest in the last five years.

Retail inflation (CPI and Index of Industrial Production) data may be released on June 12.

When we look at the monthly sequence, inflation rose by 0.3 points from January to reach 139.2 in February.

March witnessed a decrease in food inflation to 8.52 per cent, down from 8.66 percent in February.

There was no relief as far as pulses are concerned as they turned costlier by 20.47 per cent, while the prices of cereals went up by 7.83 per cent.

Previously, high inflation was recorded at 7.79 per cent in April 2022. The inflation in the food basket was 11.51 per cent in July compared to 4.55 per cent in June and 6.69 per cent in July 2022, as per the data.

"The higher-than-expected inflation has been led by vegetables, pulses, and protein-rich items. Weather-related disruptions are expected to keep prices of perishable food items elevated in the near term, says Upasna Bhardwaj, Chief Economist, Kotak Mahindra Bank, Mumbai."