In April 2024, India’s retail inflation rate slightly decreased to 4.83%, down from 4.85% in March, closely aligning with Reuters’ estimate of 4.80%. Notably, this figure remains within the Reserve Bank of India’s (RBI) tolerance band of 2-6%. However, there has been a slight increase in food prices. Let’s delve deeper into the various aspects of this statistic.
What’s Happening?
According to government data released on May 13, 2024, the retail inflation rate in April reached an 11-month low. The primary reason for this decline is attributed to a drop in fuel prices. However, food inflation increased to 8.70% in April, up from 8.52% in March. This indicates that food items are still affected by inflation.
On a positive note, inflation in the fuel and electricity sectors has decreased, with the rate dropping to (-)4.24% in April. Overall, these figures present mixed signals for the Indian economy.
Indian Retail Inflation Trends
Recent data shows a consistent decline in India’s retail inflation rate since December 2023. The rate was 5.69% in December, which decreased to 5.10% in January, 5.09% in February, and finally to 4.83% in April.
During FY24, we saw the highest inflation rate in July 2023.
Despite the slight relief, this figure remains above the RBI’s target of 4%. However, it is positive that for the eighth consecutive month, the rate has stayed within the RBI’s tolerance range of 2-6%.
What Does This Mean for Investors?
Generally, a lower inflation rate positively impacts the stock market. Following the release of April’s inflation figures on May 13, 2024, the Indian stock market saw a slight uptick on May 14. Major indices like Nifty closed at 22,104.05, up by 0.51%, while the Sensex closed at 72,776.13, gaining 328.48 points, or 0.45%. However, future trends in food inflation could influence investment decisions.
What’s Next?
According to the Deccan Herald, while there has been a reduction in retail inflation, the RBI warns that uncertainty in food product prices may persist in the future. Controlling inflation remains a challenge.
For FY24-25, the RBI has forecasted an inflation rate of 4.5%, with some quarterly fluctuations expected. The rate might be 4.9% in the first quarter, potentially decreasing to 4.5% by the year’s end.
Additionally, according to National Statistical Office (NSO) data, the inflation rate in urban areas was 4.11%, while in rural India, it was 5.43%. This means that inflation impacts rural populations more than urban ones.
Overall, while the reduction in retail inflation provides some relief, ongoing vigilance is required to manage and mitigate future inflationary pressures.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The article is for information purposes only. This is not an investment advice.
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