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The Consumer Price Index (CPI) inflation or retail inflation in May 2024 touched a 12-month low of 4.75 per cent, as per Ministry of Statistics and Programme Implementation’s latest data. In April 2024, India’s retail inflation stood at 4.83 per cent. The headline rate has been under the 5 percent mark for three consecutive months starting March 2024.
“Year-on-year inflation rate based on all India Consumer Price Index (CPI) number is 4.75% (Provisional) for the month of May 2024. Corresponding inflation rate for rural and urban is 5.28% and 4.15%, respectively,” the Ministry of Statistics and Programme Implementation said in a statement.
Headline inflation has seen sequential moderation since February 2024, albeit in a narrow range from 5.1% in February to 4.8 per cent in April 2024.
According to the data released by the National Statistical Office (NSO), inflation in the food basket was 8.69 per cent in May, marginally down from 8.70 per cent in April.
The government has tasked the Reserve Bank to ensure the CPI inflation remains at 4% with a margin of 2% on either side. Earlier this month, the RBI projected the CPI inflation for 2024-25 at 4.5%, with Q1 at 4.9%, Q2 at 3.8%, Q3 at 4.6%, and Q4 at 4.5%. The central bank mainly factors in the retail inflation while arriving at its bi-monthly monetary policy.
India’s industrial production, based on IIP, grew 5 per cent in April.
The IIP growth rate in April 2023 was 4.6 percent. The growth rates of the three sectors, Mining, Manufacturing and Electricity for the month of April 2024 over April 2023 are 6.7 percent, 3.9 percent and 10.2 percent respectively.
Within the manufacturing sector, the growth rate of the top three positive contributors to the growth of IIP for the month of April 2024 are – “Manufacture of basic metals” (8.1%), “Manufacture of coke and refined petroleum products” (4.9%), and “Manufacture of motor vehicles, trailers and semi-trailers” (11.4%).
For the month of April 2024, the Quick Estimates of IIP with base 2011-12 stands at 147.7 against 140.7 in April 2023. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of April 2024 stand at 130.8, 144.2 and 212.0 respectively.
As per Use-based classification, the indices stand at 152.2 for Primary Goods, 95.3 for Capital Goods, 156.9 for Intermediate Goods and 183.3 for Infrastructure/ Construction Goods for the month of April 2024.
Further, the indices for Consumer durables and Consumer non-durables stand at 118.7 and 151.0 respectively for the month of April 2024.
“The headline CPI inflation unexpectedly eased to a 12-month low of 4.75% in May 2024 from 4.83% in April 2024, as all sub-groups barring fuel and light either witnessed a softening or remained unchanged as compared to the previous month. The better-than-expected reading (ICRA’s forecast: +5.0%) was largely driven by a lower-than-anticipated print for the food and beverages group. Although food and beverages inflation remained unchanged at 7.9% in May 2024 as compared to the previous month, as many as seven of the 12 sub-groups including spices, meat and fish, vegetables, etc. witnessed a cooling in their inflation prints. Nevertheless, this was the seventh consecutive month of a reading above the 7.0% mark,” said Aditi Nayar, Chief Economist, Head of Research and Outreach at ICRA Ltd.
“CPI inflation at 4.75% is slightly lower than the market expectation of 4.90%. Food inflation continues to run around 8.90% levels. Given strong GDP growth expectation of 7.2% in the current year by RBI, this data may not have any meaningful impact on debt markets. Good and Normal distribution of monsoons in India is required to bring CPI food inflation down as global food prices have started moving up,” said Murthy Nagarajan, Head-Fixed Income, Tata Asset Management.
