New Delhi: India’s inflation inched up for a third straight month in April, though remaining well below the central bank’s target to prompt another interest-rate cut to support the economy.
Consumer prices rose 2.92% from a year earlier, the Statistics Ministry said in a statement on Monday. That’s the highest in six months and compares with the 2.99% median estimate in a Bloomberg survey of 39 economists.
- Though consumer prices have been firming up since February, the gains still remain below the Reserve Bank of India’s 4 percent medium-term target. The central bank is forecasting inflation of 2.9-3% in the April-September period and 3.5-3.8% in October-March
- This is the last inflation print before the central bank’s June policy meeting, with policy makers monitoring how the monsoon rain season and global crude prices will affect the inflation outlook. By the next RBI meeting, a new government would also be in place after the election results are announced on May 23
- Governor Shaktikanta Das has delivered back-to-back rate cuts at his first two policy meetings this year to boost credit in the wake of a crisis in the shadow-banking sector and as high-frequency indicators point to a slowing economy
- Passenger vehicle sales in April were the worst since October 2011, according to a separate release on Monday. That followed factory output numbers on Friday showing the first contraction in almost two years
What economists say
- “With growth slowing down and inflation under check, we are looking at a 25 basis points cut in June,” said Aastha Gudwani, an economist with DSP Merrill Lynch Ltd. in Mumbai. “Food prices are back to inflation mode and are likely to remain there in May too. The good thing is the moderation in core, which should give markets some comfort.”
- Consumer food prices rose 1.10%
- Fuel and light prices rose 2.56%
- Housing prices rose 4.76%
- Clothing and footwear prices rose 2.01%
- India is due to release wholesale price inflation numbers Tuesday
Also read: Low inflation is a double-edged sword for PM Modi before Lok Sabha elections
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