NEW DELHI:
Retail
inflation eased slightly to a 12-month low in May with
prices
of some
food
items moderating marginally, while the index of industrial production (
IIP
) growth held steady at 5% level in April.
Data released by the National Statistical Office (NSO) on Wednesday showed retail inflation, as measured by the Consumer Price Index (CPI), rose an annual 4.8% in May, nearly at the same level as the previous month.
Rural
inflation
was higher at 5.3%, while urban was at 4.2%. The food price index was at 8.7%, similar to the level in April.
This is the ninth consecutive month when retail inflation has been below the 6% upper tolerance level of RBI. The data showed food and beverages inflation at 7.9%, while fuel and light contracted 3.8%. Vegetable prices continued to be a concern, rising an annual 27.3% in May, while pulses and products rose 17.1% during the month. Core inflation, which is estimated after stripping out food and fuel, was steady at 3.1%. Vegetable prices have come under pressure due to the heatwave sweeping parts of the country.
"Looking ahead, a favourable base effect is expected to persist until July 2024, helping absorb potential upward risks to price pressures to a certain extent. For FY25, we expect inflation to average 4.8%. If food inflation moderates, we expect the RBI to cut the policy interest rate by a shallow 50 basis points in two tranches in the second half of the fiscal year," said Rajani Sinha, chief economist at ratings agency CareEdge.
Separate data released by the NSO showed IIP rose an annual 5% in April, slightly slower than the upwardly revised 5.4% in March, but above the 4.6% in April last year.
The mining and electricity sectors remained robust. The manufacturing sector grew 3.9% in April, slower than the 5.5% expansion in the year ago month. Capital goods, the key gauge of investment activity, remained sluggish at 3.1% during the month. Consumer durables grew 9.8%, compared to 2.3% contraction in April last year, while the consumer non-durables sector contracted 2.4% during the month compared to expansion of 11.4% in April last year.
English (US) ·