Retail inflation drops to record low in new series

The Consumer Price Index (CPI)-based inflation witnessed a sharp decline of sub-three per cent with the introduction of the new series. The retail inflation also saw a nearly one per cent drop from 3.89 per cent in March to 2.99 per cent in April, as an effect of the lower rate of price rise in food items such as pulses and vegetables. The inflation stood at 5.47 per cent for April, 2016. Whereas, the CSO revised the March inflation data upwards, from 3.81 per cent to 3.89 per cent.       

The fruit prices saw an increase by 3.78 per cent in April, much lower than 9.35 per cent in March. While, for cereals and products, the rate of increase in price in April was 5.06 per cent, lower than 5.38 per cent in March. The inflation in meat and fish prices also reduced from 2.96 per cent in March to 1.90 per cent in April. The overall food inflation was 0.61 per cent for the month of April, compared to 1.93 per cent in the previous month. However, inflation in fuel and light category rose in April, at 6.13 per cent, higher than 5.56 per cent in March.

Although, according to the market experts, RBI is likely to wait for more concrete data on monsoon and the observation of the impact of the proposed GST tax regime and the implementation of allowance amendments according to the Pay Commission reports to take the final decision on the repo rate cut. RBI mandates to contain the inflation rate at four per cent, with margin of two per cent on both ends.