Easing to four month low, Retail inflation, as measured by the consumer price index (CPI), slowed to 4.87% year-on-year in April, lower compared to 5.17% in March, below street expectation of a number below 5%. However, in a bit of negative surprise, March CPI inflation was revised upwards from 5.17% to 5.25%.
The General Indices (Provisional) for the month of April 2015 for Rural, Urban and Combined stood at 121.6, 119.7 and 120.7 respectively. The corresponding provisional inflation rates for rural and urban areas for the month under review stood at 5.37% and 4.36% as compared to 5.67% and 4.75% respectively in the previous month.
The fall was largely broad-based with food inflation, which constitutes nearly half the index, coming in at 5.11% compared to 6.14% in March. The CFPI for Rural, Urban and Combined for the same month stood at 123.1, 124.0 and 123.4 respectively and the corresponding provisional inflation rates for rural and urban areas for the index for the month under review stood at 5.03% and 5.17% as compared to 5.78% and 6.76% respectively in the previous month.
In other details, Clothing & footwear inflation came down to 6.15% versus 4.84% in March, but fuel & lighting inflation rose to 5.60% versus 5.07% in March. Housing inflation also declined to 4.65% versus 4.77% in March.
The latest data adds to the case for RBI slashing interest rates in its upcoming monetary policy review, which is on June 2. The Reserve Bank of India has cut interest rates twice this year at unscheduled meetings, but kept its key repo rate on hold at 7.50% last meet, waiting to assess inflationary pressures and give commercial banks more time to cut their lending rates.
Indian rupee snapping two consecutive sessions’ appreciating streak, depreciated against dollar on Tuesday tailing massive losses of local equities. Additionally, fresh dollar demand from oil importers and state run banks in view of its strength overseas weighed on the currency. Besides, cautiousness ahead of release of Industrial production figures for the month of March and CPI inflation data for the month of April added to the pessimistic environment. On the macro-front, IIP for the month of March came in at 2.1%, lower than street expectation of a number of around 2.80%, while Consumer price inflation (CPI) with changed base year from 2010 to 2012 after easing to three month low in previous month eased further to 4.87% in April, which was more or less in line with expectation. On the global front, euro rose against a broadly weaker dollar in Europe on Tuesday, with gyrations on the bond market undermining the broad story of U.S. currency strength that has dominated the past year on foreign exchange markets.
Finally the rupee ended at 64.16, weaker by 31 paise from its previous close of 63.85 on Monday. The currency touched a high and low of 64.26 and 64.11 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 64.20 and for Euro stood at 71.91 on May 12, 2015. While, the RBI’s reference rate for the Yen stood at 53.43, the reference rate for the Great Britain Pound (GBP) stood at 100.0331. The reference rates are based on 12 noon rates of a few select banks in Mumbai.