Retail inflation eases to 4.29% in April 2021 on sharp dip in food prices

India's Consumer Price Index (CPI) based retail inflation eased to 4.29% in the month of April, primarily due to reduction in food prices, as per the data released by the Ministry of Statistics & Programme Implementation (MoSPI) on Monday, May 12. It stood at 5.52% in March.

The decline in the retail inflation rate was mainly on the back of a sharp fall in food inflation. According to the data by National Statistical Office, the Consumer Food Price Index (CFPI) inflation dipped to 2.02% in April from 4.87% in March.

April's retail inflation is the lowest in three months and is well within the MPC's (Monetary Policy Committee) medium-term inflation target range of 4 (+/-2%), the data showed. This is the fifth straight month that the CPI is within the MPC's target band.

The Reserve Bank of India (RBI) mainly factors in the retail inflation based on Consumer Price Index (CPI) while arriving at its monetary policy.

Aditi Nayar, Chief Economist, ICRA, said given the high base related to the supply disruptions seen during the nationwide lockdown in April 2020, the CPI inflation dipped to a three-month low in April 2021, while printing somewhat higher than the expectations.

Overall, the prevailing localised restrictions appear to have had a limited impact on prices in April 2021, she added.