NEW DELHI, May 13 (Reuters) - India's retail inflation remained below the central bank's 4% target for the third consecutive month as food prices rose at a slower pace, opening up room for more interest rate cuts to support growth in the world's fifth-largest economy.
Annual retail inflation slowed to 3.16% in April from 3.34% in March, marking its lowest level since July 2019 and coming in below economists' estimate of 3.27% in a Reuters poll.
Inflation in food prices - which accounts for nearly half of the consumption basket - slowed to 1.78% from 2.69% in March, its lowest since October 2021.
Vegetable prices continued their downward trend, falling 11%year-on-year, compared to a 7.04% fall in March.
"The CPI (consumer price index) print today sets the stage for another rate cut by the RBI in its June policy of 25 basis points," said Sakshi Gupta, an economist at HDFC Bank.
Last month, the Reserve Bank of India (RBI) lowered its key policy rate for a second consecutive time, and signalled more cuts by changing its monetary policy stance to 'accommodative' from 'neutral'.
It cut its GDP growth estimate for the ongoing fiscal year to 6.5% from 6.7% and said it sees inflation at 4%, compared to 4.2% earlier.
Prices of cereals rose 5.35% against a 5.93% increase in March, while those of pulses fell 5.23% compared to a 2.73% fall in the same period.
Core inflation, which excludes volatile items such as food and energy and is a better gauge of domestic demand, steadied at 4%-4.1% in April from 4.1% in the previous month, according to two economists.
"We expect the retail inflation to remain in the range of 3.6% to 3.8% during April-June period on the expectations of a normal monsoon," said Rajni Thakur, an economist at L&T Finance.
Additional reporting by Hritam Mukherjee in Bengaluru and Manoj Kumar in New Delhi; Graphics by Vineet Sachdev; Editing by Varun H K
Source: Reuters