April CPI inflation hits an 11-month low; can RBI cut rates in the near future? Experts weigh in

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Retail inflation eases slightly in April, food inflation rises While the CPI inflation remains above the Reserve Bank of India’s target of 4 per cent, it has been within the central bank's tolerance range of 2-6 per cent for the eighth consecutive month. In July and August last year, retail inflation prints had come to 7.44 per cent and 6.83 per cent, respectively. India's retail inflation has been easing since December 2023, when it rose 5.69 per cent.

For January and February, inflation prints came at 5.10 per cent and 5.09 per cent, respectively. India's retail inflation is easing, but food inflation remains a concern. Food inflation rose 8.70 per cent in April, against an increase of 8.52 per cent in March and 8.66 per cent in February due to a rise in the prices of cereals, meat and fish, and fruit.

In its last policy meeting in April, RBI expressed confidence that CPI inflation had peaked at 7.8 per cent in April 2022. However, it reiterated that the fight against inflation will continue as long as retail inflation remains above the 4 per cent target. Moreover, RBI Governor Shaktikanta Das highlighted food price uncertainties continue to weigh on the inflation trajectory.

Also Read: 3 key reasons why RBI will not cut rates this year: Elara Capital Experts do not expect the RBI to cut rates in the near future as India's economic growth outlook remains bright, and the US Fed is not expected to cut rates until the third quarter of this year. "We feel that, with largely good growth, the RBI will not look at rate cuts soon. In that context, a key monitorable would be GVA growth figures at end-May’24.