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Consumer Price Index (CPI)-based inflation for April eased to 4.86 per cent, the lowest in four months, on the back of another month of declining food prices, data by the Central Statistics Office showed on Tuesday.
Consumer Food Price Inflation (CFPI) for April was 5.11 per cent, against 6.14 per cent in March and 9.21 per cent in the year-ago period. Retail inflation for March was 5.25 per cent; for April 2014 it was 8.38 per cent.
The latest inflation numbers have raised hopes of a rate cut by Reserve Bank of India Governor Raghuram Rajan at the monetary policy meeting in June. He might also cut rates outside a monetary review, as has happened twice this year. “One additional rate cut can be expected this year, and it could be in June. It is better to front-load such monetary policy action,” D K Joshi, chief economist at CRISIL, said. As banks have transmitted the previous rate cuts, he added, the path has been cleared for another rate cut.
Analysts polled by Bloomberg had estimated April CPI inflation at 4.9 per cent.
Joshi said: “Unseasonal rains earlier this year do not seem to have affected prices at all, so that is a surprise element. There are risks if the monsoon is below-average, or if oil prices rise sharply.”
The Indian Meteorological Department, in its first forecast for 2015, has said this year southwest monsoon might be below normal at 93 per cent of the long-period average.
