Categories: Economy

Retail inflation drops to over a 2-year low at 4.25% in May

India’s retail inflation has decreased to a 25-month low of 4.25% in May due to falling food prices, which is in line with the predictions of economists. This brings the consumer price index-based (CPI) inflation closer to the Reserve Bank of India‘s medium-term target of 4%.

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What does drop in retail inflation incline for the Indian economy?

The drop in retail inflation comes as a relief for the central bank, which kept key rates unchanged in its last policy review and is likely to pause it’s rate hikes for the rest of the year.
However, economists have cautioned that the trend of easing inflation is subject to the impact of El Nino on the monsoon.
On the other hand, government data revealed that the Index of Industrial Production (IIP) increased in April to 4.2% from 1.1% in March.

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