In a development that signals positive momentum for the Indian economy, India’s retail inflation witnessed a notable easing. It has come down to a 10-month low of 4.85% on an annual basis in March 2024, according to data released by the Ministry of Statistics and Programme Implementation on 12th April. The Consumer Price Index (CPI)-based retail inflation is the lowest since May 2023. In February this year, it was 5.09% and the same was 5.66% in March last year.
With this, the Modi-led NDA government has improved its inflation track record against the UPA era which was marred with high inflation fluctuating in double digits in several months. The White paper released by the Finance Ministry in February this year highlighted how NDA faired better on the parameter of inflation.
As per official data, the CAGR of inflation between FY04 – FY14 during the Congress-led UPA era stood at 8.2%. However, the NDA government has brought this down to 5.0% between FY14 – FY23.
In further signs of buoyancy towards the end of the fiscal year (FY) 2023-24, the industrial output rose to a four-month high. As per official data, factory output measured in terms of the Index of Industrial Production (IIP) grew 5.7% in February, up from 4.14% in January and 4.3% in December.
The latest data shows a more stable pricing environment, potentially offering relief to households in their daily expenses. The decline in food inflation also played a role in moderating overall inflation and it has come down to 8.52%, down from 8.66% in February. Additionally, the food and beverages inflation stood at 7.68 per cent in March, lower than 7.76 per cent in February.
Likewise, urban inflation decreased to 4.14% in March from 4.78 per cent in February, rural inflation has increased to 5.45% compared to 4.34% in February. This disparity may reflect variations in consumption patterns and supply chain dynamics across different regions.
Meanwhile, fuel and light inflation fell further from -0.77% in February to -3.24% in March. Housing inflation has dropped to 2.77% from 2.88%. Core inflation, which excludes volatile components such as food and fuel, remained steady at 3.5 per cent.
It is pertinent to note that the moderation in retail inflation comes amid other positive economic indicators. The Index of Industrial Production (IIP) for March showed robust growth. This uptick in industrial activity suggests underlying strength in the economy, potentially contributing to a more balanced inflation outlook. Overall, the moderation in retail inflation, particularly in food prices, coupled with strong industrial growth, paints a favourable picture of the economy’s resilience amidst ongoing global uncertainties.
The latest inflation data comes a week after the RBI’s Monetary Policy Committee (MPC) on 5th April announced the decision to keep the policy repo rate unchanged at 6.5% for the seventh consecutive time.
In a further relief, the RBI Governor had said that the retail inflation projections for FY25 have been reduced to 4.5% from earlier 4.7%.
(With Inputs from ANI)