India’s Inflation Rate Slows to 3.16% in April

Source Credit : CNBC

India's headline inflation rate decreased to 3.16% in April, marking the sixth consecutive month of decline. This figure is notably lower than March's rate of 3.34% and falls below the 3.27% forecasted by economists surveyed by Reuters. This sustained reduction in inflation reflects ongoing economic adjustments and may have significant implications for monetary policy and consumer spending in the coming months.

For the sixth consecutive month, inflation has experienced a decline. Notably, food inflation—a critical indicator of overall inflation in the country—decreased to 1.78% in April, down from 2.69% in March.

In a note dated May 5, analysts from Bank of America indicated that food prices are expected to remain stable, while core inflation is projected to rise due to increasing gold prices. The price of gold has surged amid escalating trade tensions that have unsettled global markets, reaching a record intraday high of $3,498.24 on April 22.

The recent inflation figures are expected to pave the way for the Reserve Bank of India (RBI) to pursue further interest rate cuts. Following the central bank's meeting on April 9, RBI Governor Sanjay Malhotra announced a strategic shift in the bank's policy stance from neutral to accommodative. This change aims to stimulate economic growth by implementing lower interest rates.

At its most recent meeting, the Reserve Bank of India (RBI) reduced its policy rate to 6%, marking the second consecutive rate cut.

India's GDP figures for the financial quarter ending in March are anticipated to be released on May 30. Bank of America (BofA) projects that GDP growth will rebound to 6.7%, an improvement from the 6.2% recorded in the previous quarter ending in December.

However, the full-year GDP is anticipated to fall short of the Reserve Bank of India's estimate of 6.5%. Earlier this year, HSBC indicated that "reciprocal" tariffs are projected to directly reduce India's full-year growth by 0.5 percentage points for the financial year ending in March 2026.

U.S. officials most recently have said that a trade deal with India was “close”, with U.S. President Donald Trump saying on April 29 that ‘I think we’ll have a deal with India’ on tariffs and trade.