India's retail inflation eases to 25-month low of 4.25% in May; IIP growth rises to 4.2% in April

Consumer price inflation in India cooled to a 25-month low of 4.25% in May as food price rises slowed further, drawing closer to the Reserve Bank of India's medium-term target of 4%, showed government data on Monday.

Food inflation, which accounts for nearly half of the consumer price index (CPI) basket, eased to 2.91% in May as against 3.84% in April.

Inflation is expected to average 5.1% and 4.8% for fiscal years 2023/24 and 2024/25, respectively. 

This is the fourth straight month when retail inflation has declined and the third month in a row that CPI-based inflation remained within the RBI's comfort zone of below 6%. At 4.25%, retail inflation is the lowest since April 2021 when it was 4.23%.

The government has tasked the central bank to ensure retail inflation remains at 4% with a margin of 2% on either side.

Inflation in fuel and light eased to 4.64%, from 5.52% in April. Last week, the Reserve Bank kept policy rates unchanged at 6.5% and projected retail inflation for the current fiscal to average at 5.1%, with June quarter inflation pegged at 4.6%.

India's industrial production rose 4.2% in April, according to the official data released on Monday.

Factory output measured in terms of the Index of Industrial Production (IIP) grew 6.7% in April 2022.

The data released by the National Statistical Office (NSO) showed that the manufacturing sector's output increased by 4.9% in April 2023.

Mining output rose 5.1% during the month under review.

Power output declined by 1.1% in April.