This is still below the upper limit of the Reserve Bank of India’s inflation target of 4% (+/-2%) and reflects a mix of seasonal food price increases partially offset by the lower retail gasoline prices in March 2024, which may partially spill over onto the April 2024 data.
While there’s an expectation of rising food prices from March 2024, the year-on-year inflation might not see a significant increase in April 2024 due to a favorable base effect. While there are price pressures, especially in seasonal foods, they might be balanced by this favorable base. Additionally, core inflation is anticipated to maintain its recent trend of moderation.
Despite recent softening, inflation remains above the Reserve Bank of India’s (RBI) target of 4%, prompting continued vigilance from policymakers. RBI Governor Shaktikanta Das reiterated concerns about food inflation volatility during the April 2024 monetary policy meeting, emphasizing the inflation trajectory’s susceptibility to supply-side disruptions.
With the arrival of summer, pressures typically mount for perishable food items, notably vegetables. However, relief might come if the India Meteorological Department’s forecast for an above-normal monsoon holds true but potential challenges and uncertainties in weather patterns and geopolitical risks might impact the inflation outlook.
Core inflation, excluding food and fuel, is anticipated to remain subdued in April 2024 but could face upward pressure from rising global commodity prices in the future.
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Source: Economy - investing.com
