The price fall witnessed in cereals,pulses, perishable goods brought down the CPI index from 2.99% in the month of April to 2.6% in the month of May. The levels attained are well below the earmarked levels of 4% by the RBI for inflation for the medium term.
The data is slated to be released on June 12 at 12:00 GMT with expectations hovering in the range of 2.26% and 3.49%.
The ease in the inflation numbers shall put a pressure on the apex body to lower down interest rates in due course in the second half of the year.
As commented by a senior economist "Consumer inflation touched an all-time low for the first time in the new series in May as food prices dipped into a negative territory on a yearly basis". Also, the decline in price was vigilant in fuel prices which were reduced last month.
Food and grain production is also expected to be good on the back of good monsoon in the year.It is to be noted that food price inflation accounts for over 50% of the CPI index and it eased to levels of 0.61% in the month of April as against the highs attained in July last year of 8.35%.
The forecast for inflation is kept in the range of 2-3.5% for the first half of the FY and for the second half it is kept at 3.5-4.5%.
"The RBI will be on wait and watch mode, but probably cut rates by end of this calendar year if (the) current scenario persists," said Karan Mehrishi, lead economist atSMERA Ratings Limited.