With headline inflation based on the consumer price index (CPI) dropping near Reserve Bank of India (RBI) target, manufacturing on revival, Indian economy on a steady upturn, said Deepak Sood, Secretary General, Assocham.
In May, India’s CPI inflation moderated to an almost 25-month low to 4.25 per cent as compared to 4.70 per cent in April 2023, broadly on expected lines driven by the base effect.
Sood added that it has been quite a drop to 4.25 per cent in May this year from 7.04 per cent in the same month a year ago. The trend is a steady decline from 4.70 per cent for April 2023.
India’s macro picture remains steady signalling further improvement in the current financial year.
“Retail inflation is just about near the RBI target of four per cent while manufacturing is clearly showing an uptick as per the latest data. The Indian economy is on a steady move even in the midst of global challenges,” Sood said.
India’s Core CPI increased marginally to 5.15 per cent in May as compared to 5.12 per cent in April, but is still below the one-year average of 5.9 per cent.
He said while retail inflation owes its decline to softening of food articles including vegetables and cooking oil, manufacturing, considered to be a major value adding segment of the economy, is looking up for even better prospects.
“As a major segment of the IIP, manufacturing showed a healthy growth of 4.9 per cent for the latest April data. This augurs well for new investment and job creation,” the Secretary General said.
Meanwhile, the rating agency Icra in a report has said that El Nino conditions pose a threat to food inflation in H2 of the financial year (FY) 2024 and it needs to be closely monitored.
