April CPI softens to four month low of 4.87% on easing food inflation

12 May 2015 Evaluate

Easing to four month low, Retail inflation, as measured by the consumer price index (CPI), slowed to 4.87% year-on-year in April, lower compared to 5.17% in March, below street expectation of a number below 5%. However, in a bit of negative surprise, March CPI inflation was revised upwards from 5.17% to 5.25%.

The General Indices (Provisional) for the month of April 2015 for Rural, Urban and Combined stood at 121.6, 119.7 and 120.7 respectively. The corresponding provisional inflation rates for rural and urban areas for the month under review stood at 5.37% and 4.36% as compared to 5.67% and 4.75% respectively in the previous month.

The fall was largely broad-based with food inflation, which constitutes nearly half the index, coming in at 5.11% compared to 6.14% in March. The CFPI for Rural, Urban and Combined for the same month stood at 123.1, 124.0 and 123.4 respectively and the corresponding provisional inflation rates for rural and urban areas for the index for the month under review stood at 5.03% and 5.17% as compared to 5.78% and 6.76% respectively in the previous month.

In other details, Clothing & footwear inflation came down to 6.15% versus 4.84% in March, but fuel & lighting inflation rose to 5.60% versus 5.07% in March. Housing inflation also declined to 4.65% versus 4.77% in March.

The latest data adds to the case for RBI slashing interest rates in its upcoming monetary policy review, which is on June 2. The Reserve Bank of India has cut interest rates twice this year at unscheduled meetings, but kept its key repo rate on hold at 7.50% last meet, waiting to assess inflationary pressures and give commercial banks more time to cut their lending rates.