Retail inflation in India has cooled to an 18-month low of 4.7% in April, making the RBI Governor Shaktikanta Das say that monetary policy is on the right track.

This is the second consecutive month that CPI (consumer price index) inflation remained below the Reserve Bank of India’s (RBI) upper tolerance limit of 6%. The lowering down of inflation was due to the cooling of food and vegetable prices.

In the preceding month, retail inflation was 5.66% while in the year-ago period, it was 7.79%.

The April inflation print is the lowest since October 2021 when it was 4.48%.

Core inflation — which is inflation without the food and fuel components — remained above 5%. But at 5.2% it was lower than estimates of 5.75-5.78% in March.

According to the National Statistical Office, inflation in food and beverages stood at 4.22% in April versus 5.11% a month ago.

The RBI has projected CPI inflation at 5.2% for FY2023-24, with 5.1% in Q1, 5.4% in Q2, 5.4% in Q3 and 5.2% in Q4.

“Notwithstanding the mixed month-on-month trends across food items, the YoY CPI food inflation is likely to remain subdued in May 2023 aided by the sustained high base (+8 per cent. in May 2022),” said Aditi Nayar, chief economist at ICRA.

Nayar said she expects the monetary policy committee (MPC) of the RBI to continue to press the pause button on rates at its next meeting in June.