India's CPI Inflation Remains Steady In April: CareEdge

CareEdge Research Report

Consumer Price Index inflation came in 4.83% YoY in April in line with our expectations, has largely remained steady, moderating marginally from 4.85% last month. The core inflation persisted at a benign rate of 3.2%, largely maintaining the same level as the previous month.

Core inflation has consistently stayed below the 4% threshold for five consecutive months. Reversing last month's trend, food inflation inched up to 7.9% as inflation in meat and fish category inched up and the ongoing deflation in the oil and fat category fell to single digits after 12 months.

The high inflation in specific food categories, including vegetables and pulses, poses a risk of potentially broadening price pressures and deanchoring inflationary expectations.

Having said that, the outlook for food inflation has brightened due to anticipations of a normal monsoon, which is expected to bolster agricultural production.

However, the temporal and spatial distribution of monsoon would be critical factors to monitor. Government initiatives on the supply side, such as the Open Market Sale Scheme and export restrictions, will further aid in keeping food prices under check.

A normal monsoon holds the key for the upcoming Kharif season as reservoir levels remain low compared to 10 year average in certain regions of the country. The arrival of the rabi harvest in the market is also expected to contribute to the cooling of food inflation.

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