India’s retail inflation dropped to 4.70% in April from 5.66% in March, data from the Union Ministry of Statistics and Programme Implementation showed on Wednesday.

This is the lowest that the price rise indicator has been since October 2021, when it stood at 4.48%. In April 2022, it was 7.79%.

Retail inflation for April continues to be within the tolerance level of the Reserve Bank of India for the second consecutive month. The central bank aims to keep inflation between 2% and 6%.

The data released by the government on Friday showed that food inflation eased to 3.84% in April from 4.79% in March.

Advertisement

The inflation in rural areas in April stood at 4.68% and 4.85% in urban areas, according to the data.

However, the Index of Industrial Production fell sharply to 1.1% in March from 5.6% in February, government data showed. This is the lowest in five months.

“For the month of March 2023, the Quick Estimates of Index of Industrial Production with base 2011-12 stands at 150.5,” it said. “The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of March 2023 stand at 154.2, 146.0 and 188.0 respectively.”

Advertisement

The ease in the retail inflation came after the Reserve Bank of India on April 6 decided to keep the repo rate unchanged at 6.50%. The repo rate is the interest rate at which the central bank lends money to commercial banks.

Central banks typically increase key lending rates at times of high inflation in economies. Higher key lending rates translate into high interest on loans disbursed by commercial banks. This, in turn, keeps a check on discretionary spending by consumers which is expected to help them with price rises due to high inflation.

The central bank’s decision to maintain the status quo on the repo rate in April came after six consecutive hikes which saw the lending rates go up by 250 basis points, or 2.50%, since May last year.