India’s retail inflation dropped to 4.25% in May from 4.70% in April, data from the Union Ministry of Statistics and Programme Implementation showed on Monday.

This is the lowest that the price rise indicator has been since April 2021, when it stood at 4.23%, according to NDTV. In April 2022, it was 7.04%.

The inflation in rural areas in May stood at 4.17% and 4.27% in urban areas, according to the data. Retail inflation for May continues to be within the tolerance level of the Reserve Bank of India for the third consecutive month. The central bank aims to keep inflation between 2% and 6%.

Data released by the government on Monday showed that food inflation eased to 2.91% in May from 3.84% in April.

Meanwhile, the Index of Industrial Production rose sharply to 4.2% on an annual basis in April from 1.1% in March.

As per the data released by the National Statistical Office, the manufacturing sector’s output grew by 4.9% in April 2023 as against 5.6% a year ago.

The easing of the retail inflation came after the Reserve Bank of India on June 6 decided to keep the repo rate unchanged at 6.50%. The repo rate is the interest rate at which the central bank lends money to commercial banks.

Central banks typically increase key lending rates at times of high inflation in economies. Higher key lending rates translate into high interest on loans disbursed by commercial banks. This, in turn, keeps a check on discretionary spending by consumers which is expected to help them with price rises due to high inflation.

The central bank’s decision to maintain the status quo on the repo rate in April came after six consecutive hikes which saw the lending rates go up by 250 basis points, or 2.50%, since May last year.