Consumer inflation eases to 4.83% in April

Consumer inflation data April 2024 news: Retail inflation in the country, gauged by the Consumer Price Index (CPI), came in at 4.83 per cent last month, slightly better than 4.85 per cent the previous month, according to official data released on Monday. Retail inflation—also known as consumer inflation—is the rate of increase in the prices consumers pay for a basket of select goods and services.

Core inflation—which strips out volatile food and energy prices—stood unchanged sequentially, at 3.2 per cent, according to the data. 

"The April print was no surprise and inflation will likely tick up to 5.0-5.1 per cent in the next month. We see more of the FY24 trends continuing in FY25. Considerable uncertainty prevails in the food price outlook," said Madhavi Arora, Lead Economist at Emkay Global Financial Services. 

"We see FY25E inflation at 4.6 per cent with core inflation again undershooting headline inflation, by ~90bps at 3.7 per cent," Arora added. 

Food inflation, measured by the CPI Food index, however, worsened to 8.70 per cent in April from 8.52 per cent the previous month. 

"Overall, food inflation is in line with the RBI's trajectory and hence may not have any material impact on policy or markets," said Akhil Mittal, Senior Fund Manager-Fixed Income at Tata Asset Management.

The Reserve Bank of India (RBI), which tracks consumer inflation data primarily for formulating its monetary policy, has projected consumer inflation at 4.5 per cent in FY25 (4.9 per cent in Q1, 3.8 per cent in Q2, 4.6 per cent in Q3, and 4.5 per cent in Q4). 

Last month, the central bank governor-led Monetary Policy Committee (MPC) voted 5:1 to leave the repo rate—or the benchmark interest rate at which the RBI lends money to commercial banks—unchanged at 6.5 per cent. 

The RBI is scheduled to meet for the next bi-monthly review in June.

What is consumer inflation? 

Consumer inflation is a crucial economic indicator that measures the average change over time in the prices paid by urban consumers for a basket of goods and services.

The Consumer Pice Index reflects the cost of living for the average household and is essential for assessing price stability and making informed economic decisions.

The CPI data plays a significant role in shaping economic trends and influencing financial decisions at both individual and institutional levels.

Several factors influence consumer inflation, such as supply and demand dynamics, production costs, exchange rates, and government policies.

Changes in these variables can lead to fluctuations in prices, affecting the CPI and ultimately impacting consumers' purchasing power.