Retail inflation dips to over 2-year low of 4.25 pc in May

Retail inflation declined to a 25-month low of 4.25 per cent in May mainly on account of softening prices of food and fuel items. Inflation based on the Consumer Price Index (CPI) stood at 4.7 per cent in April and 7.04 per cent in May 2022.

This is the fourth straight month when retail inflation has declined and the third month in a row that Consumer Price Index (CPI) based inflation remained within the RBI's comfort zone of below 6 per cent. At 4.25 per cent, retail inflation is the lowest since April 2021 when it was 4.23 per cent.

The government has tasked the central bank to ensure retail inflation remains at 4 per cent with a margin of 2 per cent on either side. Inflation for the food basket was at 2.91 per cent in May, lower than 3.84 per cent in April. The food basket accounts for nearly half of the CPI. Inflation in fuel and light eased to 4.64 per cent, from 5.52 per cent in April. Last week, the Reserve Bank kept policy rates unchanged at 6.5 per cent and projected retail inflation for the current fiscal to average at 5.1 per cent, with June quarter inflation pegged at 4.6 per cent.

Meanwhile, India's industrial production rose 4.2 per cent in April, according to the official data released on Monday. Factory output measured in terms of the Index of Industrial Production (IIP) grew 6.7 per cent in April 2022.

The data released by the National Statistical Office (NSO) showed that the manufacturing sector's output increased by 4.9 per cent in April 2023. Mining output rose 5.1 per cent during the month under review. Power output declined by 1.1 per cent in April.