Consumer Price Index (CPI)-based inflation cooled to a 25-month low of 4.25 per cent in May as food price rises slowed further, drawing closer to the Reserve Bank of India’s (RBI) medium-term target of 4 per cent, showed government data on Monday. 

Food inflation, which accounts for nearly half of the CPI basket, eased to 2.91 per cent in May as against 3.84 per cent in April. 

Inflation is expected to average 5.1 and 4.8 per cent for 2023-24 and 2024-25 respectively.  

This is the fourth straight month when retail inflation has declined and the third month in a row that CPI-based inflation has remained within the RBI’s comfort zone of below 6 per cent. At 4.25 per cent, retail inflation is the lowest since April 2021 when it was 4.23 per cent. 

The government has tasked the central bank to ensure that retail inflation remains at 4 per cent with a margin of 2 per cent on either side. 

Inflation in fuel and light eased to 4.64 from 5.52 per cent in April. Last week, the RBI had kept policy rates unchanged at 6.5 per cent and projected retail inflation for the current financial year to average at 5.1 per cent with the June quarter inflation pegged at 4.6 per cent. 

Meanwhile, industrial production rose by 4.2 per cent in April, according to the official data released on Monday. 

Factory output measured in terms of the Index of Industrial Production (IIP) had grown by 6.7 per cent in April 2022. 

The data released by the National Statistical Office (NSO) showed that the manufacturing sector’s output increased by 4.9 per cent in April 2023. 

Mining output rose by 5.1 per cent during the month under review, while power output declined by 1.1 per cent in April 2023.