Consumer price inflation likely slipped in April, food inflation sticky

India's consumer price inflation is likely to have eased to 4.80 per cent in April, just shy of March's rate as food inflation remains sticky, according to economists polled by Reuters.

While headline inflation has moderated in recent months, food prices, which account for nearly half the consumer price index (CPI) basket, have remained elevated, squeezing household budgets.

With parts of the country experiencing a heatwave, food prices continue to pose an additional risk to India's inflation trajectory, according to the latest Reserve Bank of India bulletin.

The May 3-8 Reuters poll of 44 economists showed consumer price inflation likely slipped to 4.80 per cent in April, versus 4.85 per cent in March.

 

Forecasts ranged between 4.50 per cent and 5.10 per cent, with a third of respondents predicting inflation to be above the March reading.

"Food inflation is sticky, and it is still around 8 per cent... it is difficult for food inflation to come down further and headline inflation is not going to fall in a hurry," said Suman Chowdhury, chief economist at Acuite Ratings.

"There is no new kind of driver to lower inflation right now. We believe inflation will remain at around 5 per cent or even go higher in the next few months."

V Anantha Nageswaran, the government's chief economic adviser, said on Wednesday the Indian economy was better placed than before to pursue "non-inflationary" growth.

Inflation was expected to return to the RBI's 4 per cent medium-term target next quarter, the same quarter the central bank is expected to deliver an interest rate cut, a separate Reuters survey showed.

However, India's robust economic growth rate, at 8.4 per cent in the October-December quarter, and expectations the US Federal Reserve will delay its first rate cut were likely to push the RBI to ease monetary policy at a later date.

"We believe monetary policy has little to no influence on inflation especially when supply constraints drive food inflation," said Kunal Kundu, India economist at Societe Generale.

"With India's growth unusually high and given the central bank's focus on headline inflation... we expect the bank to announce its first rate cut move during Q4 2024, although we do not rule out the possibility of the decision being pushed further back into 2025."

Core inflation, which strips out volatile food and energy prices, was 3.18 per cent in April, according to the median forecast of 22 economists. Official core inflation figures are not published.