BY PRANOY KRISHNA
BENGALURU — Indian consumer inflation likely eased to a near six-year low in April after a further moderation of food price rises, keeping it below the Reserve Bank of India’s 4 percent medium-term target for a third straight month, a Reuters poll of economists found.
Intense heatwaves this summer did little to affect a robust harvest, offering much-needed relief to many Indian households which allocate a significant portion of their budgets to food.
Food prices account for nearly half of the consumer price basket.
The May 5-8 Reuters poll of 43 economists suggested inflation, as measured by the annual change in the consumer price index (CPI), fell to 3.27 percent in April from 3.34 percent in March.
Forecasts for the inflation data ranged between 2.8 percent to 4.0 percent. Due to a government holiday on Monday, it announced that April’s CPI data would be released on Tuesday.
Survey medians suggested prices rose at the slowest pace since mid-2019 last month.
“The slight decline we will see is because food inflation continues to ease on a month-on-month basis. Vegetable prices, pulses, cereals … even fruits declined,” Gaura Sengupta, chief economist at IDFC First Bank, said.
“The fact is we are in April, and you’re entering the summer months. The expectation is seasonally you should see a pick-up in vegetable prices, but for now we’re not seeing that.”
A separate Reuters poll conducted last month suggested inflation would average 4.0 percent this fiscal year, in line with the RBI’s projection.
Meanwhile, the price of gold – a prized commodity in India – rose around 5.0 percent in April as investors sought a safe haven from global trade tensions, offsetting the sharp slowdown in headline inflation observed over the past few months.
With inflation predicted to stay subdued, the RBI has more room to cut interest rates to support a slowing economy.
Early predictions of above-average monsoon rains this year have raised expectations of stronger agricultural output and higher rural demand in a largely agriculture-dependent economy.
