Ira Singh
Khabar Khabaron Ki,12 June’24
India’s retail inflation eased to 4.75% annually in May, slightly down from the 11-month low of 4.83% recorded in April, driven by a marginal decline in prices of some kitchen essentials,according to government data released on Wednesday. This inflation rate continues to fall within the Reserve Bank of India’s (RBI) acceptable range of 2-6%, providing a stable economic outlook.
According to estimates, the food inflation rate in May eased to 8.62 per cent from 8.75 per cent in April. However, it has remained higher than the 3.3 per cent registered in May 2023. The rural inflation dipped to 5.28 per cent in May from 5.43 per cent. Meanwhile, urban inflation rate stood at 4.15 per cent in May.
The RBI Governor highlighted the downward trajectory of inflation, underpinned by favorable base effects. However, he acknowledged the persistent pressure from service prices which has sustained the key indicator at a heightened level compared to the stipulated targets.
The RBI reportedly maintains the inflation target for fiscal 2025 at 4.5%. Inflation for fiscal 2024 stood at 5.4 per cent, at par with the central bank’s forecast, according to information.The central bank now sees inflation for Q1, Q2, Q3 and Q4 of this fiscal year at 4.9 per cent, 3.8 per cent, 4.6 per cent and 4.5 per cent, respectively, with risks evenly balanced. In the April policy, the monetary authority had pegged the inflation readings at 4.9 per cent, 3.8 per cent, 4.6 per cent and 4.5 per cent respectively, assuming a normal monsoon.
The marginal decline highlights the effectiveness of recent monetary policies aimed at controlling inflationary pressures. Analysts believe this trend is a positive indicator of economic resilience amidst global uncertainties. Furthermore, the sustained inflation rate within the target range may influence the RBI’s future policy decisions, potentially maintaining the current interest rates to support ongoing economic recovery. The moderation in inflation is largely driven by stable food prices and improved supply chain mechanisms, offering relief to consumers and policymakers alike. However, experts caution that external factors such as fluctuating global oil prices and geopolitical tensions could still impact future inflation trends.