In April, India’s consumer price inflation is predicted to have eased to 4.80%, slightly lower than the rate in March. Despite the moderation in headline inflation over the past few months, food prices, which make up a significant portion of the consumer price index basket, have remained high. This has put pressure on household budgets, making it difficult for inflation to decrease further.
Food inflation, currently around 8%, continues to be a major concern for India. With parts of the country experiencing a heatwave, the risk of further increase in food prices remains. According to experts, the sticky nature of food inflation suggests that headline inflation is unlikely to decrease significantly in the near future. This poses challenges for policymakers in managing the overall inflation rate.
Economists are divided in their forecasts for inflation in the coming months. While some expect inflation to remain around 5% or even go higher, others believe that it may ease slightly. The Reserve Bank of India is expected to cut interest rates in the next quarter as part of its efforts to bring inflation back to the targeted 4% medium-term level.
India’s strong economic growth rate, coupled with expectations of a delay in the U.S. Federal Reserve’s rate cut, is likely to influence the RBI’s decision on monetary policy. Some experts argue that monetary policy may have limited impact on inflation, especially when supply constraints are driving food prices higher. Despite this, the central bank remains focused on managing headline inflation through policy measures.
Core inflation, which excludes volatile food and energy prices, stood at 3.18% in April. This indicates that inflationary pressures are not limited to food prices alone. Economic advisers suggest that pursuing “non-inflationary” growth is crucial for India’s economy to maintain stability. However, the uncertainty surrounding future inflation levels and the timing of interest rate cuts pose challenges for policymakers and investors alike.
Consumer price inflation remains a key concern for India’s economy, with food prices playing a significant role in driving overall inflation rates. The government and central bank will need to adopt a balanced approach to managing inflation while supporting economic growth. With uncertainties surrounding global economic conditions, India’s inflation trajectory in the coming months will require careful monitoring and proactive policy measures.