India's Retail Inflation Dipped to 4.83%, 11 Month Low, but higher than the 4% Targeted rate of RBI
CPI stands at 4.83%, but Consumer Food Prices Index rates surged by 0.18% to 8.7%. Instead, of this a Slight Dip in inflation Rate of Vegetable, Fruits, Clothing and Fuel. RBI's forecast expects CPI inflation to be around 4.5% for FY24.
Consumer Price Index dipped to 4.83%, 0.02% lower than March
The Consumer Price Index in April fell by 0.02% to 4.83 as of Previous Month, however the price of Food and Beverages or Consume Food Price Index CFPI Surged by 0.18% as compared to the previous month —According to the data released by the Ministry of Statistics and Program Implementation on Monday 13 May. CPI inflation in rural areas stood at 5.43%, while CPI inflation in urban areas stood at 4.11%, the average CPI inflation rate stood at 4.7%.
India Retail Inflation Rate is on 11 Months Low
Consumer Price Index experienced a 10 Month Low in March, and now according to the lastest data of Ministry of Statistics and Program Implementation, CPI inflation for April has dipped to 11 month low. Although CPI inflation has already declined significantly, but it is still much higher than the 4% targeted Inflation rate of Reserve Bank of India.
Higher than the 4% Targeted rate of RBI
The Central Bank RBI, is diligently striving to minimize the gap between the Current Consumer Price Index (CPI) rates and its targeted rate of 4%. According to the latest researched forecast of the Central Bank of India, the CPI inflation rate for the entire year is likely to be 4.5%.
Forecasting April's Inflation in India: 22 Economist Predictions"
A poll was conducted by Mint in order to forcast india's retail Inflation rate for April. In which 22 Financial Experts participated, majority of the economists predicted that India's April inflation rate will be Unchanged and remain stable. Most of the 22 economists estimated that the inflation rate will be from 4.7% to 5.1%. Only 4 analysts have polled inflation rate of more than 5%.
What about Vegetable, Fruits and Clothing ?
However, the Data Released by Ministry of Statistics and Programme Implementation Recorded an Increase of 0.18% in CFPI. But, there has been a slight decline in the prices of vegetables. Last month the CPI inflation of Vegetables and Fruits was 28.3%, which has now decreased by 0.5% to 27.8% in April. The Inflation Rate for Cereals and Pulses Stands at 8.63% and 16.84% ,respectively. Inflation rate of Clothing, Footwear, Housing, Real Estate Fuel and Light also shown a slight dip as compared to the previous month.
Surge in Consumer Food Price Index
Consumer Food Price Index experienced a surge of of 0.18%, last month CFPI stood at 8.52% and currently it has surged to 8.70, this follows a slight dip in February when the index recorded at 8.66. CFPI of Urban and Rural Areas is 8.75% and 8.56%, respectively.
RBI Inflation Prediction for Fiscal year 2025
India's Central Bank RBI inflation projection for the FY25 is 4.5 and for each quarter of financial year 2025 is Expected to be — Q1: 4.9%, Q2: 3.8%, Q3: 4.6%, and Q4: 4.5%.
What Experts are Saying ?
"Unchanged headline and core inflation reading from previous month will continue to provide respite to the Monetary Policy Committee. However, erratic weather and heatwaves should keep the overall sentiment cautious. We do not expect much change to RBI’s narrative for now, as a prolonged pause in policy rates remains the base case.” said Upasna Bhardwaj the Chief Economist at Kotak Mahindra Bank.
Senior Fund Manager, Akhil Mittal
"CPI came in at 4.83 year-on-year, in line with expectations. All broader indices are well contained other than food prices. Overall in line with RBI trajectory and hence may not have any material impact on policy or markets," Stated by Akhil Mittal, Senior Fund Manager-Fixed Income at Tata Asset Management.
Prediction for Inflation rate for the Next Month
Radhika Rao, Chief Economist and Senior Director of DBS bank, says that fuel prices have decreased due to Lower Retail Prices and High Supply, due to which, Disinflation and lower Inflation has been recorded in Non-Food Categories (including Fuel). She further said in his statement that due to higher food prices, CPI inflation is likely to be 5-5.1% in May 2024.
"May inflation is tracking close to 5.0-5.1 per..." Said Radhika Rao
Additionally, "May inflation is tracking close to 5.0-5.1 per cent on firmer food. For the central bank, strong growth prospects alongside lower core (below 3.3 per cent) and contained inflationary expectations will continue to keep policy in a comfortable hold in the first half of the fiscal year,” She said.
Chief Global Strategist at Pace 360, Amit Goel
The Co-Founder and Chief Global Strategist at Pace 360, Amit Goel believes that, "Consumer Price Index (CPI) might have risen by 4.80 per cent year on year in April, down from a 4.85 per cent increase in March, marking the fourth consecutive month of milder CPI readings. Food inflation is expected to decrease for the second consecutive month, dropping to 7.2 per cent in April from 7.7 per cent in March. Core inflation is likely to decrease to 3.2 per cent from 3.3 per cent in March,"
"improve liquidity in the market,"
Amit Goel Further Added that, "This downward trajectory may prompt the RBI to transition to a dovish stance in June, followed by the initiation of a rate-cutting cycle in August. The RBI's dovish stance, potentially leading to rate cuts in August, could improve liquidity in the market," said Goel.
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