India's annual retail inflation eased to 18-month low in April, staying well below the Reserve Bank of India's (RBI) upper tolerance limit for the second consecutive month, as food prices eased.
Annual retail inflation eased to 4.7% in April from 5.66% in the previous month, government data showed on Friday. This was the lowest reading since October 2021, when it hit 4.48%, and also lower than Reuters' forecast of 4.80%.
The Reserve Bank of India (RBI) targets an inflation range of 2%-6%.
"This (April inflation number) gives me and my colleagues in the RBI reasonable amount of confidence, I would say good amount of confidence, that the monetary policy is on the right track," RBI governor Shaktikanta Das said at an event in Mumbai after the data was released.
Food inflation, which accounts for nearly half of the overall consumer price basket, moderated further to 3.84% compared with 4.79% in the previous month.
"A lack of flare-up of food inflation, gradual moderation in core inflation, and strong support from a favorable base effect in case of fuel inflation has played a key role," Mumbai-based Vivek Kumar, economist at Quanteco Research, said.
Food inflation was the lowest since a November 2021 reading of 1.87%.
Core inflation, which has been a major concern for policy makers for months, continued to be below 6% for second consecutive month. According to three economists' estimates, core inflation was at 5.2% in April, compared with between 5.75% and 5.78% in March.
The Indian government does not release core inflation figures.
The price of vegetables fell 6.5%, while edible oil fell 12.33%, offsetting a sharp 13.67% rise in cereal prices and an 8.85% rise in milk prices.
Most economists expect price inflation to remain well below 6% in the coming months, even though it is expected to rise from April levels.
"With inflation risks easing, we expect MPC to remain on a 'pause' at least till the end of CY2023," said Garima Kapoor, an economist at Elara Capital.
Last month, the RBI surprised markets by holding its key repo rate steady after six consecutive hikes and economists expect it to remain on hold for the rest of the year, in its bid to support the economic recovery in Asia's third-largest economy.