India’s retail inflation drops to 25 month low

India’s retail inflation dropped to a 25-month low of 4.25% in May, from 5.00% in April, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI) on June 10.

The decline in inflation was driven by a fall in food prices, which fell to 1.98% in May from 2.87% in April. The decline in food prices was due to a good monsoon, which led to a bumper crop, and government measures to control food inflation.

The fall in inflation is a positive sign for the Indian economy, as it will help to boost consumer spending and economic growth. The Reserve Bank of India (RBI) is likely to keep the repo rate unchanged in its next monetary policy review on June 24.

Factors that contributed to the decline in inflation

The following factors contributed to the decline in inflation in May:

  • Good monsoon: The monsoon season was good in 2022-23, which led to a bumper crop. This led to a fall in the prices of food items, such as cereals, vegetables, and fruits.
  • Government measures: The government took a number of measures to control food inflation. These measures included increasing the procurement of food grains from farmers, releasing food stocks from government warehouses, and providing subsidies to farmers.
  • Fall in global commodity prices: The prices of global commodities, such as crude oil, have fallen in recent months. This has helped to keep inflation in check in India.

Impact of the decline in inflation

The decline in inflation will have a positive impact on the Indian economy. It will help to boost consumer spending, which will in turn boost economic growth. The RBI is likely to keep the repo rate unchanged in its next monetary policy review on June 24.

Outlook for inflation

Inflation is expected to remain in check in the coming months. The good monsoon will continue to support food prices, and the government is likely to continue to take measures to control inflation. The RBI is likely to keep the repo rate unchanged in the coming months.

Conclusion

The decline in inflation is a positive sign for the Indian economy. It will help to boost consumer spending and economic growth. The RBI is likely to keep the repo rate unchanged in its next monetary policy review on June 24.

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