India’s Retail Inflation Eases to 12-Month Low of 4.75% in May

India’s consumer price index (CPI) inflation dropped to a 12-month low of 4.75% in May 2024, down from 4.83% in April, marking a continued trend within the Reserve Bank of India’s target range of 2-6% since September 2023. The inflation rates for rural and urban areas stood at 5.28% and 4.15%, respectively. Despite this decrease, inflation in the food basket remained elevated at 8.69% in May, slightly lower than 8.70% in April. The Reserve Bank of India aims to maintain CPI inflation at 4%, with a margin of 2% on either side, and recent projections suggest a stable outlook for the coming quarters.

Overview of CPI Inflation

In May 2024, India’s consumer price index (CPI) inflation reached a 12-month low of 4.75%, indicating a marginal decline from the previous month’s 4.83%. This aligns with the Reserve Bank of India’s target range and reflects varied inflation rates across rural (5.28%) and urban (4.15%) areas.

Food Inflation Trends

Despite the overall decrease in CPI inflation, food inflation remained high at 8.69% in May, marginally down from 8.70% in April. This category continues to influence India’s inflation dynamics significantly.

RBI’s Inflation Targets and Projections

The Reserve Bank of India (RBI) has set a target of maintaining CPI inflation at 4%, with a range of 2% on either side. Projections for 2024-25 indicate a stable inflation outlook, with varying rates across quarters: Q1 at 4.9%, Q2 at 3.8%, Q3 at 4.6%, and Q4 at 4.5%.