India: Inflation declines to lowest level since July 2019 in April
Latest reading: Inflation eased to 3.2% in April, down from March’s 3.3%. April’s reading represented the lowest inflation rate since July 2019. Price pressures for food continued to ease thanks to recently strong harvests, which have been boosted by last year’s strong monsoon.
Annual average inflation fell to 4.5% in April (March: 4.6%).
Lastly, consumer prices rose 0.31% in April over the previous month, contrasting the 0.26% drop seen in March. April’s uptick marked the highest reading since October 2024.
Outlook: Average inflation is projected to remain below the Reserve Bank of India’s 4.0% target until January–March 2026 (Q4 FY 2025), at which point it’s likely that the delayed impact of lower interest rates will begin fanning price pressures.
Overall in fiscal year 2025, inflation is seen averaging around target, kept in check by the recent decline in food price growth and lower oil prices. Looking ahead, key risks include weather developments, vital for agriculture, as well as U.S. trade policy due to its impact on external demand.
Panelist insight: Nomura’s Aurodeep Nandi and Sonal Varma said:
“While we broadly agree with the RBI’s inflation outlook (4.0% for FY26), we see its GDP growth forecast (of 6.5%) as optimistic, and expect it to average 5.8%, especially in an environment of global tariff-driven disruptions. With inflation firmly below the RBI’s 4.0% target in the immediate future, we believe there is ample space for the RBI to focus on addressing growth concerns. Hence, we expect a terminal repo rate of 5.00%, which implies an additional 100bp in rate cuts by end-2025 (25bp in each of the consecutive meetings in June, August, October, and December).”