India's May retail inflation eases slightly to 4.75%

(Reuters) -India's retail inflation rate eased slightly in May, partly helped by fall in fuel prices although food prices remained elevated, government data showed on Wednesday.

Annual retail inflation in May was 4.75%, down from 4.83% in April and lower than the 4.89% forecast by 50 economists polled by Reuters.

COMMENTARY:

V K VIJAYAKUMAR, CHIEF INVESTMENT STRATEGIST, GEOJIT FINANCIAL SERVICES, ERNAKULAM

"The decline in CPI inflation to 4.75% in May indicates that the process of disinflation in India is happening in a phased manner. The decline in core inflation to 3.1% is good news for the MPC."

"This paves the way for rate cut by the RBI earlier than expected, if the Fed also turns dovish."

SUJAN HAJRA, CHIEF ECONOMIST AND EXECUTIVE DIRECTOR, ANAND RATHI SHARES AND STOCK BROKERS, MUMBAI

"The retail inflation rate for May 2024 was lower than expected, both in core and non-core components. Despite this, inflation remains significantly above the RBI's target, making a rate cut in the next six months unlikely."

RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE

"May inflation was in line with our expectations, experiencing two-way pressure – food costs rose on sequential terms on higher perishables, while non-food categories faced disinflationary pressure providing relief to real purchasing power."

"Heading into the second quarter, base effects are likely to push the headline further south. The monetary policy committee is likely to see through the temporary correction, with an eye on the lagged impact of heat wave and monsoon progress. The May print is unlikely to be of consequence for RBI's policy review in August."

YUVIKA SINGHAL, ECONOMIST, QUANTECO RESEARCH, NEW DELHI

"This CPI inflation print broadly entails the ongoing story of comfort on fuel and core remaining intact, alongside price pressures on food."

"The intense heat waves across several parts of the country meant no letup in the food price momentum in May, seen in case of perishables such vegetables and milk, and non-perishables such as pulses and sugar."

SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM

"Positive print on both consumer price index (CPI) and index of industrial production (IIP), with CPI undershooting expectations while IIP came in higher than expected. The growth and inflation dynamics remain favourable. We see inflation inching lower due to base effects and favourable monsoons over the coming months."

"Although, we continue to expect the RBI to remain cautious for now, both due to domestic and global factors, including food inflation pressures, the timing of the Fed rate cut and the impending budget announcement."

SWATI ARORA, ECONOMIST, HDFC BANK, MUMBAI

"Inflation surprised on the downside. Moderation in inflation was led by a moderation in core inflation and a decline in fuel inflation. Food inflation continued to remain elevated in line with seasonal trends."

"Going forward, core inflation is expected to bottom out and start rising from Q2 FY25. Core CPI is expected to rise above 4% August or September onwards amid lower base from last year."

(Reporting by Siddhi Nayak in Mumbai, Hritam Mukherjee, Nandan Mandayam, Kashish Tandon, Anisha Ajith in Bengaluru; Editing by Varun H K)