India Inflation Hits 25-Month Low; Industrial Output Growth Improves

India Inflation Hits 25-Month Low; Industrial Output Growth Improves

June 13, 2023

India’s consumer price inflation moderated more-than-expected in May to its lowest level in just over two years amid a continued slowdown in food prices, and industrial production expanded at an accelerated pace in April, separate data from the National Statistical Office showed on Monday.

The consumer price index, or CPI, rose 4.25 percent year-over-year in May, slower than the 4.70 percent rise in April. Economists had forecast the inflation rate to drop to 4.42 percent.

In the corresponding month last year, inflation was 7.04 percent.

Inflation remained within the Reserve Bank of India’s tolerance band of 2-6 percent for the third month in a row.

Nonetheless, the inflation rate is still slightly above the central bank’s medium-term target of 4.0 percent.

At its latest meeting held last week, the Monetary Policy Committee of the RBI lowered the CPI inflation for 2023-24 to at 5.1 percent from 5.2 percent.

Food price inflation moderated to 2.91 percent in May from 3.84 percent in the prior month, largely led by an 8.18 percent plunge in vegetable prices, the NSO data showed.

Prices for clothing and footwear rose 6.64 percent annually in May, and housing costs were 4.84 percent higher.

On a monthly basis, consumer prices went up 0.68 percent in May and food prices showed an increase of 0.51 percent.

Separate official data showed that industrial production growth rebounded from March’s 5-month low of 1.7 percent to 4.2 percent in April. That was also well above the expected rise of 1.8 percent.

Among the three main sectors, mining production grew the most, by 5.1 percent. This was closely followed by a 4.9 percent increase in manufacturing output. On the other hand, electricity production logged a decline of 1.1 percent.

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