The country’s retail inflation is likely to remain broadly unchanged at 4.87% in April, up from 4.85% in the previous month. 22 economists involved in Mint’s survey have made this prediction. Economists’ estimates vary between 4.70% and 5.10%. Only four projected the inflation rate to be above 5%. The average estimate is found to be 4.85 percent. The official retail inflation data will be released on May 13.
Shreya Sodhani, regional economist at Barclays, who was also involved in the survey, said food prices have been rising since March, especially for food items, which are largely seasonal. However, this is likely to be offset by a favorable base. With this in mind, core inflation may continue to moderate.
At the same time, economist Sujan Hazra said that with the onset of summer, pressure on prices of perishable food items, especially vegetables, generally increases. However, if the Meteorological Department’s forecast of a normal monsoon comes true, some relief can be hoped for.
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RBI may adopt a cautious approach
Union Bank Chief Economic Adviser Kanika Pasricha estimates that core inflation may fall to a record low of 3.1% in April. But this will require a close watch on trends in global commodity prices (especially oil and gold). RBI may adopt a cautious approach in view of fluctuations in retail inflation.
What is the retail inflation rate?
There are two bases for measuring inflation in India. First retail and second wholesale inflation. The rate of retail inflation is based on the prices paid by ordinary consumers. It is also called consumer price index. At the same time, wholesale price index means the price charged by one trader to another trader in the wholesale market.
These prices are linked to deals done in bulk. Apart from crude oil, commodity prices, construction costs, there are many other factors that play an important role in determining the rate of retail inflation. There are about 300 items on the basis of which the retail inflation rate is determined.