Retail inflation eased to an 11-month low of 4.83 per cent in April as prices of some kitchen items declined though overall food basket firmed up marginally, according to a government data released on Monday.

The Consumer Price Index (CPI)-based retail inflation was 4.85 per cent in March. It was 4.7 per cent in April 2023. The previous low inflation was at 4.31 per cent in May 2023.

The inflation in the food basket was at 8.70 per cent in April, marginally up from 8.52 per cent in March, according to data released by the National Statistical Office (NSO).

Inflation in egg, meat, spices, and 'cereals and products' was lower in April, while fruits, vegetables, and pulses were expensive.

The index for 'fuel and light' in the CPI declined to 4.24 per cent in April on a yearly basis.

The government has tasked the Reserve Bank of India (RBI) to ensure inflation remains at 4 per cent, with a margin of 2 per cent on either side.

According to the RBI, which factors in consumer inflation while arriving at its bi-monthly monetary policy, food price uncertainties continue to weigh on the inflation trajectory going forward.

The central bank has projected the CPI inflation for 2024-25 at 4.5 per cent with the first quarter at 4.9 per cent; second at 3.8 per cent; third at 4.6 per cent; and the forth at 4.5 per cent.

The NSO data further revealed that inflation in urban areas was lower than the national average of 4.11 per cent and higher in rural India at 5.43 per cent.

The highest inflation was witnessed in Odisha at 7.11 per cent and lower in Delhi at 2.17 per cent.

States recording higher inflation than the national average were Andhra Pradesh, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh, Assam, Bihar, Chhattisgarh, Haryana, Karnataka, Kerala, and Madhya Pradesh.

Commenting on the CPI data, ICRA Chief Economist Aditi Nayar said the moderation in inflation was led by a larger deflation in fuel and light segments, and softer prints for the clothing and footwear, and pan, tobacco and intoxicants groups.

Inflation in the vegetables and pulses categories remained in double-digits for the sixth and eleventh consecutive month, respectively, thereby contributing to the elevated food and beverages print, she added.

"The impending favourable base effects during Q2 FY25 are expected to materially soften the headline inflation print to 2-4 per cent in July 2024 and August 2024. Nevertheless, a timely onset and good distribution of monsoon would be crucial to support agriculture output in 2024-25 and help control food inflation," Nayar said.

CRISIL Chief Economist Dharmakirti Joshi said the mild easing of the headline number in April is encouraging, but acceleration of this downtrend is what matters, especially since recent swings have been worrying.

"Our base case is that the upcoming monsoon can offer respite, assuming they are well distributed in terms of time and geography. Fuel and light, with a 6.8 per cent weight in the CPI gauge, has been reducing the pressure on the headline for eight months led by retail fuel price relaxations by the government," he said.

But if crude oil prices rise substantially and stay elevated in wake of geopolitical stress, the gains to inflation could be reversed, Joshi said. ' With continued uncertainty, especially on the risks to the food inflation trajectory after the September quarter of FY25, the chance of a stance change in the upcoming June monetary policy review by the RBI appears rather dim, she said.

NSO collects the the price data from selected 1,114 urban markets and 1,181 villages covering all states/UTs on a weekly roster.

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