Consumer inflation at four-month low; El Nino likely to spoil the party

At 4.87%, Consumer Price Index (CPI) has dropped for third straight month in April. The inflation number is also at its lowest point in four months period. 

According to data provided by the Central Statistics Office (CSO), consumer inflation, or retail inflation, came in at 4.87% for the month of April as against 8.48% in the same month of last year. Sequentially, too, retail inflation dropped from 5.25% in March. 

Consumer Food Price Index (CFPI), dropped to 5.11%  in April from 6.14% in March 2015. Food inflation in April 2014 was at 8.66%. 

However, this drop in food price inflation might not remain for long as the recent rains that lashed parts of India had damaged crops. 

source: tradingeconomics.com

India has already seen a few farmers commit suicide this year after the unseasonal rains damaged crops.

According to India's Met department, the monsoons this year is going to be below normal. The agency has further said that El Nino conditions might persist. 

Crisil, in its note on April 22 said, "A normal monsoon is crucial to push economic growth this year, given weak investment climate, tepid export growth and fragile consumption. Our base case, given a normal monsoon, is that agricultural growth will be 3% -- up from a weak base of 1.1% in fiscal 2015."

Japanese brokerage firm Nomura, too, has warned that El Nino conditions might push up food inflation in India going forward.