Mint Quick Edit | Inflation is on a slow decline
India has marginally positive new data on the economic front. Retail inflation edged lower to 4.75% in May from 4.83% in April. Meanwhile, industrial output in April clocked a healthy 5% expansion, though it marked a decline from 5.4% in March.
The production reading appears to validate the upbeat performance seen on other activity indicators such as the Purchasing Managers’ index, or even India’s gross domestic product growth numbers. Nevertheless, attention will stay focused on inflation, which has been guiding monetary policy. Though only a tad lower, it is slowly moving closer to the Reserve Bank of India’s 4% target.
Elevated food prices are to blame for its current high level. If monsoon rains, however, keep their promise, a potential rise in agricultural supplies could help cool retail inflation down. That would pave the way for the Indian central bank to start cutting interest rates later this fiscal year.
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