Retail inflation likely to ease to 6-year low of 3% in May on cooling food prices: UBI
Retail inflation, or the Consumer Price Index (CPI), will continue to moderate to 3.0 per cent in May, a six-year low, mainly due to the sequential moderation in prices of cereals and pulses even as most other segments started to strengthen, according to a Union Bank of India (UBI) report.
As per the inflation data released by the Ministry of Statistics and Programme Implementation, retail inflation in April fell to 3.16 per cent from 3.34 per cent in March.
CPI inflation is a key economic indicator that reflects the rate at which prices of goods and services consumed by households are increasing over time.
Further, the report said that inflation, excluding vegetables, stayed steady at 4.11 per cent, while core inflation slightly increased to 4.18 per cent, mainly because of the low base from last year. However, the report added that weak demand and stable prices of most commodities (except precious metals) are expected to keep core inflation under control.
The report added that inflation excluding gold likely stayed low at 3.4 per cent, up slightly from 3.3 per cent in April.The April CPI slips to six-year lows, as the decline in inflation is attributed to a decrease in the prices of vegetables, pulses, and products, fruits, meat and fish, personal care and effects, and cereals and products.Effectively, overall inflation declined 18 basis points in April 2025 compared to last year's period.According to the data, core inflation remained almost flat at 4.09 per cent in April, while core inflation excluding gold stayed unchanged at 3.3 per cent.Core CPI ex-transport, post-recording a spike in March (4.26 per cent), has again softened to 4.18 per cent. Within the core inflation category, personal care inflation has moderated from 13.50 per cent in March to 12.90 per cent.Core inflation is defined as a measure of inflation that removes volatile, short-term price changes in key categories, primarily food and energy, in order to portray a steadier, long-term trend in price increases.
The inflation level gives confidence to economists and analysts, as current inflation rates are within the Reserve Bank of India's (RBI) manageable range of 2-6 per cent. Retail inflation last breached the Reserve Bank of India's 6 per cent upper tolerance level in October 2024. Since then, it has been in the 2-6 per cent range, which the RBI considers manageable.
Food prices were a concern for Indian policymakers, who wished to sustain retail inflation around 4 per cent.After the RBI's April monetary policy review meeting, the central bank said that inflation is expected to remain under control in the financial year 2025-26.
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