India’s CPI Inflation eases to 12-month low of 4.75 per cent in May

NEW DELHI — India’s consumer price inflation eased to a 12-month low of 4.75 per cent in May, compared to the same month of the previous year as declining fuel and cooking oil prices helped to bring down the burden on household budgets, figures released by the Ministry of Statistics on Wednesday showed.

CPI inflation had come down to 4.83 per cent in April, which was an 11-month low and the declining trend is continuing.

“Spices has shown a considerable decline at sub-group level in year-on-year inflation as compared to April 2024. Among the groups, inflation corresponding to ‘Clothing & Footwear’, ‘Housing’, and ‘Miscellaneous’ has decreased since last month,” the Ministry said.

The declining trend in cooking oil prices continued in May with a 6.7 per cent fall during the month. The price rise in spices slowed to 4.27 per cent from 11.4 per cent in April.

The inflation in pulses, however, stayed high at 17.14 per cent.

Vegetable prices, too, shot up by as much as 27.33 per cent, albeit a tad lower than 27.8 per cent in April which remains a pain point for consumers. The prices of cereals also increased by 8.65 per cent during the month.

Food inflation, which accounts for nearly half of the overall consumer price basket, rose 7.87 per cent in April, compared with an 8.52 per cent rise in the previous month.

The country’s CPI inflation has been showing a declining trend in recent months as it fell to 4.85 per cent in March from 5.09 per cent in February and 5.1 per cent in January this year.

However, it is still above the RBI’s mid-term target of 4 per cent and is the main reason why the central bank has not gone in for a cut in interest rates to rev up growth.

The RBI is keen to keep inflation under control to ensure growth with stability and held the repo rate steady at 6.5 per cent for the eighth consecutive time in a row in its bi-monthly monetary policy review on Friday.

While the RBI has raised its projected GDP growth estimate to 7.2 per cent for 2024-25 from 7 per cent earlier, it has kept its projection for retail inflation at 4.5 per cent.

RBI Governor Shaktikanta Das said the forecast above-normalmal monsoon bodes well for the kharif season and could bring respite to food inflation pressures, particularly in cereals and pulses. However, the outlook on crude oil prices remains uncertain due to geo-political tensions. Assuming a normal monsoon, CPI inflation for 2024-25 is projected at 4.5 per cent as the risks are evenly balanced, he added while making the monetary policy announcement last week.

“At the current juncture, the uncertainties related to the food price outlook warrant close monitoring, especially their spillover risks to headline inflation. In parallel, the behaviour of the core component also needs to be watched carefully. We need a descent of inflation to the 4 per cent target on a durable basis, while supporting growth,” Das said.