India's Retail Inflation Drops to 6-Year Low of 3.16%
India's retail inflation has fallen to 3.16% in April, marking its lowest level in the past 69 months. This is the lowest inflation rate since July 2019, when it was 3.15%. The decrease is largely attributed to the continuous reduction in food prices.
Key Highlights:
- The inflation basket sees almost 50% contribution from food items.
- In March, food price inflation dropped from 3.75% to 2.67% month-on-month.
- Rural inflation fell from 3.25% to 2.92%, while urban inflation decreased from 3.43% to 3.36% in April.
- The retail inflation rate in India dropped from 3.34% in March to 3.16% in April, the lowest in over 5 years.
How Inflation Increases and Decreases?
Inflation increases and decreases depending on the demand and supply of products. When people have more money, they tend to buy more, which increases the demand for goods. If supply does not match this demand, prices rise, leading to inflation.
On the other hand, if demand decreases and supply remains high, inflation will decrease.
Understanding CPI and Its Role in Inflation
Consumer Price Index (CPI) plays a critical role in determining inflation. As consumers, we buy goods and services, and the changes in the prices of these goods are tracked by the CPI. CPI measures the average price level of a basket of 300 goods, which includes items like crude oil, commodities, and manufactured goods.