Inflation drops to 4.89% in Apr; lowest since Nov 2009

Declining price of food items, including fruits and vegetables, pulled down inflation to nearly a three-and-a-half-year low of 4.89 per cent in April, which may present a case for further monetary policy easing.

Inflation based on the Wholesale Price Index (WPI) stood at 5.96 per cent in March. In April, 2012, it was 7.50 per cent.

This is the lowest level of inflation since November, 2009 when it was 4.78 per cent.

As per official data released on Tuesday, WPI inflation in the manufactured items category declined to 3.41 per cent in April from 4.07 per cent in March.

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Also, inflation in food articles category, which has a 14.34 per cent share in the WPI basket, came down to 6.08 per cent. Inflation in this category was at 8.73 per cent in March.

The easing in food inflation was helped by a sharp drop in prices of vegetables. Inflation in vegetables stood at (-)9.05 per cent in April, against (-)0.95 per cent in the previous month.

The inflation in fruits declined to 0.71 per cent during the month as compared to 4.71 per cent in March.

However, the rate of price rise in onion was high at 91.69 per cent for the month of April, as against inflation rate of 94.85 per cent in the previous month.

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Inflation for February was revised upwards to 7.28 per cent from 6.84 per cent as per provisional estimates.

The retail inflation, as measured by consumer price index, came down to single digit at 9.39 per cent in April after many months, indicating that inflationary expectation is on declining trend.

The RBI will take into account the declining inflationary trend while unveiling its mid-quarter policy review on June 17.

Commenting on inflation figures, Department of Economic Affairs Secretary Arvind Mayaram said: "We are happy that inflation figure has come down".

Inflation in wheat eased to 13.89 per cent in April, as against 19.87 per cent in the previous month. Potatoes too saw decline to (-)2.42 per cent, from 20.06 per cent in March.

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Inflation rate in rice and cereals eased to 17.09 per cent and 15.63 per cent, respectively, in April.

Pulses prices declined marginally to 10.28 per cent during the month.

While the inflation rate in egg, meat and fish category stood at 10.44 per cent, for milk it was 4.04 per cent.

For the fuel and power category, it was lower at 8.84 per cent in April as compared to 10.18 per cent in March, 2013.

In order to accelerate economic growth, the Reserve Bank of India (RBI) earlier this month cut key interest rates by 0.25 per cent.

"Although headline WPI inflation has eased by March, 2013 to come close to the Reserve Bank's tolerance threshold, it is important to note that food price pressures persist and supply constraints are endemic, which could lead to a generalisation of inflation...," the RBI had said.