Retail inflation eases to 4.7% in April; March IIP falls sharply to 1.1%

The food inflation also eased to 3.84% in April

India's consumer price index (CPI)-based inflation fell to 4.7 per cent in April, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed on Friday. In the month of March, the retail inflation was 5.66 per cent. 

The food inflation also eased to 3.84 per cent in April. It was 4.79 per cent in March. 

However, the Index of Industrial Production (IIP) fell sharply to 1.1 per cent in March from 5.6 per cent in February. 

"For the month of March 2023, the Quick Estimates of Index of Industrial Production (IIP) with base 2011-12 stands at 150.5. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of March 2023 stand at 154.2, 146.0 and 188.0 respectively," the Centre's announcement said. 

"As per Use-based classification, the indices stand at 158.2 for Primary Goods, 120.9 for Capital Goods, 158.2 for Intermediate Goods and 178.7 for Infrastructure/ Construction Goods for the month of March 2023. Further, the indices for Consumer durables and Consumer non-durables stand at 118.1 and 145.6 respectively for the month of March 2023," it added. 

The April's inflation numbers were the lowest in 18 months. It was for the second month in a row that retail inflation remained within the Reserve Bank of India's (RBI) comfort zone of below 6 per cent.

Retail inflation rose from 5.7 per cent in December 2022 to 6.4 per cent in February 2023 on the back of higher prices of cereals, milk and fruits and slower deflation in vegetable prices. The RBI has projected the CPI inflation at 5.2 per cent for FY2023-24, with 5.1 per cent in Q1, 5.4 per cent in Q2, 5.4 per cent in Q3, and 5.2 per cent in Q4, and risks evenly balanced.

"The April 2023 CPI inflation eased to an 18 month low of 4.7 per cent, benefitting from the high base as well as cooler than normal temperatures, which delayed the seasonal rise in prices of perishable items. April 2023 was marked by above-average rainfall and lower than normal temperatures, which helped to keep prices of some vegetables under check. Notwithstanding the mixed month-on-month trends across food items, the YoY CPI food inflation is likely to remain subdued in May 2023 aided by the sustained high base (+8.0 per cent in May 2022)," said Aditi Nayar, chief economist and head of research & outreach, ICRA.

"Most of the available high frequency indicators recorded a deterioration in their YoY performance in April 2023, relative to March 2023, partly on account of the unseasonal rainfall seen during the month. Accordingly, ICRA expects the YoY IIP growth to remain sub-2 per cent in that month," she added.