CPI Preview: Inflation Expected To Near Six-Year Low In April

India's retail inflation is likely to continue to dip further in April after easing to the lowest in a little less than six years in March.

The Consumer Price Index-based inflation is projected to rise by 3.20% in April, according to a median forecast of economists polled by Bloomberg. This is after it came in at 3.34% in March—the lowest since August 2019, and below the central bank's target of 4%. WPI inflation is seen at 1.5% in April 2025, according to the median forecast of economists polled by Bloomberg, down from 2.05% in March on a high base and moderation in commodity prices.

CPI inflation in April 2025 is seen edging lower to 3.18% from 3.34% in March, on the back of benign food prices and still muted core inflation, Teresa John, deputy head of research and economist at Nirmal Bang Institutional Equities said. Food and beverage inflation is likely to come in at 2.53% on an annual basis in April 2025, down from 2.88% in March 2025.

The moderation will be led mainly by a correction in vegetable prices, which is likely to have fallen by 1.5% month-on-month, compared to falls of 5.7% in March, 11.2% in February and 15.7% in January, according to a note by Kaushik Das, chief economist at Deutsche bank.

He expects CPI inflation to stay below 4% for the rest of this calendar year and only rise above 4% in January-March 2026, when the base effect turns negative. Headline CPI inflation has the potential to drift even lower, if the government decides to lower domestic pump prices of petrol and diesel, with falling global prices, he said.

"With the inflation outlook largely benign for the foreseeable future, supported by moderation in global commodity prices, a decent Rabi crop and an anticipated normal to above normal monsoon, we cut our CPI forecast for FY26 to 3.5% from 4.1% earlier and WPI forecast to 1.5% from 3.3% earlier," John said. This implies that rate cut cycle may be deeper than the base case of 100 basis points. 

"With multi-year low inflation in March and benign inflation expectations going forward, we expect rate cuts of 75 basis points in June and August and another 50 basis points cut in H2 that could put the terminal Rate at about 5.0%-5.25% by March 2026," said Soumya Kanti Ghosh, group chief economic advisor at SBI.

However, jumbo cuts of 50 basis points, could be more effective than secular 25 basis points tranches spread over the horizon, he added.