CPI Inflation Eases In April On Base Effect
Vegetables are displayed for sale at the Dadar wholesale vegetable market during a weekend lockdown in Mumbai, India, on Saturday, April 10, 2021. Photographer: Dhiraj Singh/Bloomberg

CPI Inflation Eases In April On Base Effect

Retail inflation eased in April over a year ago when pandemic-related supply disruptions had pushed up food prices.

Inflation as measured by the Consumer Price Index stood at 4.29% compared with 5.52% in March, according to data released by the Ministry of Statistics and Programme Implementation on Wednesday. On a monthly basis, the index rose by 0.7% as the gauge climbed to 157.9 in April from 156.8 in March.

A Bloomberg poll of 35 economists had pegged April retail inflation at 4.1%.

For April last year, data was imputed for CPI groups for which no data was available or collected or transacted. As such, the year-on-year computation of price changes would also be impacted by those underlying anomalies.

Inflation in food and beverages was at 2.66% in April 2021 compared with 5.24% in March. On a monthly basis, it rose 0.9% from March 2021.

Core inflation was at 5.2% in April 2020, the lowest since June 2020. However, on a monthly basis, core inflation rose 0.6%.

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 expectations, said Aditi Nayar, chief economist at ICRA. Overall, the prevailing localised restrictions appear to have had a limited impact on prices in April 2021, she added.

As the lockdown base effect fades, CPI inflation is expected to bounce back to an average of 5.0% in the remainder of the first half of FY22, ruling out the possibility of further rate cuts to support economic activity and sentiment, Nayar added.

Inflation Internals

  • Inflation in the pulses category was at 7.5% in April 2021. The index rose 1.18% over a month ago.
  • Cereal prices fell 2.96% annually and rose 0.14% monthly.
  • Vegetable prices contracted 14.18% annually and fell 3.2% monthly.
  • Fuel and light inflation stood at 7.91% y-o-y with no change seen over a month ago.
  • Inflation in transport and communication was at 11.04% in April. The index rose 0.5% compared to the previous month.
  • Clothing and footwear inflation was at 3.49% in April, with the index rising 0.6% compared to March.
  • Housing inflation stood at 3.73%. The index rose 0.9% over the previous month.
  • Household goods and services inflation was at 2.01%. Compared to March, prices rose 0.5%.
  • Health inflation was at 7.76% in April. It rose 0.5% compared to the previous month.
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