India's retail inflation rate eased slightly in April, partly due to lower fuel prices, although food prices remained elevated, government data showed on Monday.
Annual retail inflation (INCPIY=ECI) in April was 4.83%, down from 4.85% in March. Economists polled by Reuters had forecast April retail inflation at 4.80%.
Food inflation, which accounts for nearly half of the overall consumer price basket, rose 8.70% in April, compared with a 8.52% rise in the previous month. Food inflation has been accelerating at more than 8% year-on-year since November 2023.
The inflation rate for cereals was 8.63%, compared with 8.37% in the previous month and pulses rose 16.84%, compared with 17.71% in March. Vegetable prices rose 27.8% in the month of April.
With parts of the country experiencing a heatwave, food prices continue to pose an additional risk to India's inflation trajectory, according to the latest Reserve Bank of India (RBI) bulletin.
"The anticipated threat from a severe heatwave has so far not played out in a disruptive manner, food price pressures need to be on close watch due to their inherent volatility," said Vivek Kumar, economist at QuantEco Research.
In April, fuel and power prices fell 4.24% compared with a fall of 3.24% in the previous month.
Core inflation, which strips out volatile food and energy prices, is estimated at 3.23% in April, compared with 3.3%-3.4% in March, according to two economists.
The Indian government does not release core inflation figures.
Even though core inflation has been benign, the RBI kept its key interest rate steady for the seventh straight policy meeting last month, as it wants inflation to fall to 4% on a durable basis before cutting rates.
"We do not expect much change to RBI's narrative for now as a prolonged pause in policy rates remains the base case," said Upasna Bhardwaj, economist at Kotak Mahindra Bank.
High food inflation and rural stress have been two key policy planks in the ongoing national election for the country's main opposition Congress, which has promised several cash handouts to alleviate the situation.
To contain food inflation Prime Minister Narendra Modi, who is chasing a rare third term in power, has banned exports of wheat, rice and onions when prices rose to contain domestic inflation.
Earlier this month, India lifted its ban on onion exports ahead of voting in key onion-growing areas.
Last week, government's chief economic advisor V Anantha Nageswaran said he did not see any "nasty" upside at the moment to the inflation and expected it to ease towards 4%.
