NEW DELHI: Consumer price based-inflation (CPI) moderated to 4.83% in April from 4.85% in March, mainly driven by petroleum-related commodity groups like fuel and light, transport and communication services, as per the data shared by the Ministry of Statistics and Program Implementation.
However, food inflation remained a concern as it stood elevated at 8.7% in April in comparison with 8.5% in March. On a year-on-year basis, inflation is higher in April 2024, as it stood at 4.7% with food inflation being much lower at 3.84%. Meanwhile, core inflation has also fallen to 3.2%, the lowest in the 2012 base CPI series.
CPI inflation in April 2024 continues its downward trend since December 2023, marking the second consecutive month with inflation below 5%. “If this trend continues, CPI inflation in the first quarter of FY25 may turn out to be marginally lower than the Reserve Bank of India’s (RBI) projection of 4.9%,” said DK Srivastava, Chief Policy Advisor, EY India.
According to Madhavi Arora, Lead Economist with Emkay Global, the April print was no surprise and inflation will likely tick up to 5.0-5.1% in the next month. “We see more of the FY24 trends continuing in FY25. Considerable uncertainty prevails in the food price outlook. Despite healthy progress in Rabi production, uneven seasonality in vegetable prices together with increasing incidence of climate shocks warrant careful monitoring,” Arora said.
“Upside risks to inflation also emanate from geopolitical developments and their impact on supply chains as well as uncertainty around volatility in commodity prices in global financial markets and the FX space. However, percolation of monetary policy will continue to put downward pressure on core inflation.”
“We see FY25E inflation at 4.6% (RBI: 4.5%), with core inflation again undershooting headline inflation, by 90 bps at 3.7% (4.4% in FY24). There is likely to be further easing of headline inflation in coming months, before the unfavourable base effects kick-in in 2HFY25,” Arora stated.
