New Delhi: India’s retail price inflation dropped to a new record low at 2.99% in April from a nearly five-month high of 3.89% in March on a lower base effect and lower food prices.

Updated wholesale price index (WPI)-based inflation for the same month under a new series with a 2011-12 base year also eased to 3.85% in April from 5.29% in the previous month.

The Department of Industrial Policy and Promotion updated the WPI by assigning revised weights and the list of items it tracks to better reflect the current reality. It also excluded excise duty while computing WPI to insulate it from fiscal policy changes. The department also set up a technical review committee to periodically update WPI to make the series relevant during its life cycle.

Economists believe that the lower CPI and WPI numbers will not provide room for any monetary policy rate cut any time soon due to upside risks to core inflation, which excludes food and fuel.

The Reserve Bank of India’s monetary policy committee, with a mid-term target retail inflation target of 4%, has maintained a hawkish stance on inflation.

Inflation in the next couple of months is contingent upon the monsoon. The India Meteorological Department forecast on Wednesday that the country will receive higher monsoon rainfall than previously predicted, as concerns have eased over El Nino, a weather phenomenon associated with drought-like conditions in the subcontinent.

A poor monsoon could lead food prices to rise and force the central bank to raise interest rates for the first time in more than three years.

Even the third advance estimates of the food grain production 2016-17, released by the ministry of agriculture on Tuesday, signalled a record harvest of 273.38 million tonnes, beating a previous forecast of 271.98 million.

Economists are hopeful these conditions will ease food prices in the coming months

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