Ahead of the upcoming CPI numbers on 13 May 2024, investors are closely monitoring India’s retail inflation trends. Projections suggest that retail inflation is likely to remain steady at around 4.8% in April 2024, following a slight decline in March. There is a possibility that it could touch 5.0% year-on-year again, although estimates vary between 4.63% and 5.02%. Surprisingly, only a few experts foresaw a potential increase above 5% in the coming month.
The current inflation rate is still below the upper limit of the Reserve Bank of India’s target range of 4% with a deviation of +/-2%. The mix of seasonal food price increases and lower retail gasoline prices in March has played a role in shaping the inflation trajectory. While there is an expectation of rising food prices in April, the year-on-year inflation may not witness a significant surge due to a favorable base effect.
Despite the existing price pressures, particularly in seasonal foods, the inflationary impact might be offset by the favorable base effect. RBI Governor Shaktikanta Das highlighted concerns regarding food inflation volatility during the recent monetary policy meeting in April 2024. He emphasized the susceptibility of the inflation trajectory to supply-side disruptions, signaling the need for continued vigilance from policymakers.
In addition to overall inflation, core inflation, which excludes food and fuel prices, is expected to remain subdued in April. However, there could be upward pressure on core inflation in the future due to rising global commodity prices. This trend poses potential challenges for policymakers in maintaining price stability and sustainable economic growth.
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