Retail inflation may dip closer to RBI's 4% target in May, say economists
India TodayIndia's headline retail inflation in May is likely to fall further towards 4% — the midpoint of the central bank's target and a level last seen in January 2021, according to a few economists, who expect lower food prices to aid the decline. "Our analysis places May CPI inflation tracking around 4%, which suggests the Q2 average is likely to undershoot the RBI's forecast of 5.1% by as much as 60 basis points," Nomura economists Sonal Varma and Aurodeep Nandi wrote in a note. Besides softer food prices, a "significant" base effect will also bolster May's inflation data, IDFC FIRST Bank said, pegging this month's inflation at 4.2%. Barclays expects India's inflation to drop to 4.3% in May and to stay between 4% and 5% for the "foreseeable future," despite the base effect beginning to wane from June this year.