Consumer inflation in the country was revised to a final 5.84 per cent in March from a provisional 5.91 per cent last month, official data released on Tuesday showed. That marked the lowest level of retail inflation – or the rate of increase in consumer prices determined by the Consumer Price Index (CPI) – recorded in November last year. Still, inflation stayed above the Reserve Bank of India’s medium-term goal of 4 per cent for the sixth month in a row, as the country remained in an extended lockdown with few exceptions to curb the spread of the coronavirus (COVID-19) pandemic, hurting demand in an already-slowing economy.
The provisional figure for April was not released. Economists had expected the government to release a provisional CPI figure for the month of April on Tuesday. According to a median poll of more than 40 economists by news agency Reuters conducted between May 5 and May 7, retail inflation was expected to be at a provisional 5.68 per cent last month.
The National Statistical Office (NSO) said that the price collection through personal visits was suspended with effect from March 19 “in view of the preventive measures and announcement of nationwide lockdown by the Government to contain spread of COVID-19 pandemic”.
Economists say the latest reading fuelled hopes that the RBI will bring more measures to support the economy, in the country’s fight against the fallout from the pandemic, at a time when low demand has already slowed expansion for several months running.
The RBI tracks consumer inflation primarily for formulating its monetary policy. The central bank has already reduced the repo rate – the key interest rate at which it lends short-term funds to commercial banks – to a 15-year low of 4.40 per cent.
However, some say consumer inflation might not remain the driver of policy due to the rapidly-spreading COVID-19 outbreak.
Many groups of economists have anticipated a further blow to the economy, which was already staring at the worst pace of annual expansion in more than 11 years, thanks to the COVID-19 outbreak.