Chief Economic Advisor V Anantha Nageswaran expects inflation to head towards the central bank's medium-term target of 4 percent.
“We don’t see, at the moment, scope for nasty upside surprises. There can always be scenarios in geopolitics that can cause inflation to be more than what we expect, but at this point, the baseline scenario is that inflation gradually converges to the mid-point of the target range," he said at an event in New Delhi.
India's headline retail inflation rate eased to a 10-month low of 4.85 percent in March, according to data released by the Ministry of Statistics and Programme Implementation on April 12.
While the CPI inflation has extended its stay inside the Reserve Bank of India (RBI) tolerance range of 2 to 6 percent to a seventh consecutive month, it has now spent 54 months staying consistently above the medium-term target.
Nageswaran reiterated that retail inflation is well within the RBI's reference range and "the expectation is that, subject to monsoon, it will continue to head towards the mid point of the target range".
In what is expected to give a big boost to farm production, the India Meteorological Department last month predicted 'above normal' rainfall for the country between June and September this year.
Following this prediction, the finance ministry in its monthly economic review for March said that further easing of food prices is on the anvil, given the IMD's above-normal rainfall prediction.
India's food inflation has been hovering over 8 percent for the past few months, with the latest print at 8.5 percent in March.
RBI governor Shaktikanta Das has in the past raised the issue of considerable vulnerability in food inflation, which is interrupting the ongoing disinflation process and therefore posing challenges for the final descent to the target.
The central bank projects consumer price index (CPI) inflation for the current financial year at 4.5 percent.
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