India CPI inflation preview: April CPI inflation likely to stay below 5%; core inflation may ease further

India CPI inflation preview: India's Consumer Price Index (CPI)-based inflation, or retail inflation, for April may stay near the level of the previous month amid a mild uptick in food and beverage inflation, while core inflation, which excludes volatile items such as food and energy and is the focus of the Reserve Bank of India (RBI), may moderate further, according to experts.

India's retail inflation has been easing since December last year when it rose 5.69 per cent. For January and February, inflation prints came at 5.10 per cent and 5.09 per cent, respectively. In March, retail inflation saw a notable decline, coming at 4.85 per cent. Economists expect retail inflation to come near 4.80 per cent in April.

Experts believe the April retail inflation print will remain below the 5 per cent mark but above the 4 per cent target of the RBI. Consequently, it is anticipated that the RBI will maintain its policy rates during its forthcoming June meeting.

Also Read: 3 key reasons why RBI will not cut rates this year: Elara Capital

In its last policy meeting in April, RBI Governor Shaktikanta Das highlighted concerns over food price uncertainties even as he expressed optimism that a record rabi wheat production would help ease price pressure. Moreover, the prospects of a normal monsoon are expected to augur well for the kharif season.

Brokerage firm Nirmal Bang expects CPI inflation to come in at 4.91 per cent in April 2024. Food and beverage inflation is likely to increase, led by higher prices of fruits and vegetables, even as cereal inflation is abating.

"CPI food and beverage inflation is seen at 8.2 per cent in April versus 7.7 per cent in March. Core CPI inflation is expected to

sustain its moderating trend and is seen at 2.97 pert cent in April versus 3.2 per cent in March," said Nirmal Bang.

Also Read: RBI rate cuts now ‘off the table’ in FY25, says Morgan Stanley

Amit Goel, the co-founder and chief global strategist at Pace 360, believes India's retail inflation is poised to continue its slowdown in April due to widespread cooling in prices across food and core goods.

"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," said Goel.

"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.

Meanwhile, a Mint poll of 22 economists revealed India's retail inflation may remain broadly unchanged at 4.87 per cent in April, compared to 4.85 per cent the previous month.

Projections from the economists varied between 4.70 per cent and 5.10 per cent, with only four anticipating the inflation rate to exceed 5 per cent.

Also Read: Retail inflation likely to be steady at 4.87% in April: Mint poll

RBI, in its April policy meeting, projected CPI-based inflation for FY25 at 4.5 per cent, with Q1 at 4.9 per cent, Q2 at 3.8 per cent, Q3 at 4.6 per cent and Q4 at 4.5 per cent.

Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.