Capital Market conducted the poll amongst economists for their projections of inflation figure for April 2024. As per the results of poll, the inflation rate is projected to accelerate to 1.0% in April 2024. Economists in the poll have projected WPI inflation in the range of 0.8-1.2% for April 2024. The median of the economists forecast's for inflation of April 2024 stood at 1.0%, while the average was also at 1.0% for April 2024.

CPI Inflation: April 2024

The all-India general CPI inflation declined to 4.83% in April 2024 (new base 2012=100), compared with 4.85% in January 2024. The corresponding provisional inflation rate for rural area was 5.43% and urban area 4.11% in April 2024 as against 5.51% and 4.14% in January 2024. The core CPI inflation was steady at 3.25% in April 2024 compared with 3.25% in January 2024.

Among the CPI components, inflation of food and beverages increased to 7.87% in April 2024 from 7.74% in January 2024. Within the food items, the inflation for oils and fats increased to (-) 9.43%, meat and fish 8.17%, fruits 5.22% and cereals and products 8.63%. However, the inflation for spices eased to 7.75%, milk and products 2.97%, pulses and products 16.84%, egg 7.08% and sugar and confectionery 5.94%. Further, the inflation for vegetables declined to 27.80%, prepared meals, snacks, sweets etc. 3.46% and non-alcoholic beverages 2.60% in April 2024. The inflation for housing declined to 2.68%, while that for miscellaneous items rose to 3.54% in April 2024.

Within the miscellaneous items, the inflation for personal care and effects increased to 7.45%, household goods and services 2.69% and health 4.27%, while the inflation for transport and communication declined to 1.09%, education 4.20% and recreation and amusement 2.64% in April 2024.

The inflation for clothing and footwear declined to 2.85%, while the CPI inflation of fuel and light eased to (-) 4.24% in April 2024.

WPI Inflation: March 2024

The Wholesale Price Index (WPI)-based inflation, base year 2011-12, increased to 0.5% in March 2024 from 0.2% in February 2024. Inflation for all the three major sub-groups - primary articles, fuel and power group and manufactured products group increased contributing to the overall increase in inflation in March 2024. The core inflation (manufactured products excluding foods products) moved up to (-) 1.2% in March 2024 from (-) 1.3% February 2024.

The WPI inflation is retained unchanged at 0.3% for January 2024 from 0.3% reported at provisional level.

Inflation of primary articles was steady at 4.5% in March 2024 from 4.5% in February 2024. However, the inflation for fuel and power group inflation gained to (-) 0.8% from (-) 1.6% in February 2024. Further, manufactured products inflation moved up to (-) 0.8% in March 2024 from (-) 1.3% in February 2024.

Inflation of food items (food articles and food products) increased to 4.6% in March 2024 from 4.1% in February 2024. Meanwhile, inflation of non-food items (all commodities excluding food items) rose to (-) 1.0% in March 2024 from (-) 1.3% in February 2024.

The contribution of primary articles to the overall inflation of 0.5% rose to 118 basis points (bps) in March 2024, from contribution of 117 bps to 0.2% inflation in February 2024. The contribution of fuel product group increased to (-) 10 bps against (-) 22 bps in February 2024, while that of manufactured products rose to (-) 51 bps in March 2024 from (-) 77 bps in February 2024.

The contribution of food items (food articles and food products) to inflation of 0.5% in March 2024 increased to 129 bps from 113 bps to 0.2% in February 2024.Meanwhile, the contribution of non-food items (all commodities excluding food items) gained to (-) 75 bps in March 2024 from (-) 95 bps in February 2024.

FAO Food Price Index: April 2024

The benchmark for world food commodity prices edged higher in April, as higher prices of meat and modest upticks for vegetable oils and cereals outweighed decreases in sugar and dairy product prices. The FAO Food Price Index, which tracks monthly changes in the international prices of a set of globally-traded food commodities rose 0.3% in April 20224 from its revised March level, while declined 9.6% from its level a year ago.The FAO Cereal Price Index rose by nearly 0.3% from March, ending a three-month declining trajectory. Global wheat export prices stabilized in April, as strong competition among major exporters offset concerns about unfavourable crop conditions in parts of the European Union, the Russian Federation and the United States of America. Maize export prices increased, influenced by a robust import demand amidst mounting logistical disruptions as a result of infrastructure damages in Ukraine and concerns about the production in Brazil ahead of the main harvest. The FAO All-Rice Price Index declined by 1.8%, due largely to falls in Indica quotations driven by harvest pressure.

The FAO Vegetable Oil Price Index also increased by 0.3% from March, reaching a 13-month high, as higher quotations for sunflower and rapeseed oil more than offset slightly lower prices for palm and soy oils.

The FAO Meat Price Index increased by 1.6% in April from the previous month, as international poultry, bovine and ovine meat prices all rose. By contrast, world pig meat prices fell marginally, reflecting slack internal demand in Western Europe and persistently lacklustre demand from leading importers, especially China.

The FAO Sugar Price Index declined by 4.4% from March to stand 14.7% below its April 2023 level. The decrease was mostly related to improved global supply prospects, notably due to larger-than-previously-anticipated outputs in India and Thailand and improved weather conditions in Brazil.

The FAO Dairy Price Index decreased marginally, by nearly 0.3%, ending six consecutive months of increases, led by sluggish spot import demand for skim milk powder and by lower world cheese prices impacted by the strengthening of the United States dollar. World butter prices, by contrast, increased amid steady global import demand.

Outlook

The WPI inflation rose in March 2024 along with the moderation in the core inflation. As per the RBI, the food price uncertainties would continue to weigh on the inflation outlook. An expected record rabi wheat production in 2023-24, however, will help contain cereal prices. Early indications of a normal monsoon also augur well for the kharif season. On the other hand, the increasing incidence of climate shocks remains a key upside risk to food prices. Low reservoir levels, especially in the southern states and outlook of above normal temperatures during April-June, also pose concern. Tight demand supply conditions in certain pulses and the prices of key vegetables need close monitoring. Fuel price deflation is likely to deepen in the near term following the recent cut in LPG prices. After witnessing sustained moderation, cost push pressures faced by firms are showing upward bias. Geo-political tensions and volatility in financial markets also pose risks to the inflation outlook.