Industry watchers hail continuous easing in CPI inflation

New Delhi: Strong growth prospects, along with a timely onset and "well distribution" of the monsoon season, would be crucial to help control food inflation in coming months, industry experts said on Monday, as India’s consumer price inflation (CPI) eased to an 11-month low of 4.83 per cent in April.

Sanjeev Agrawal, President, PHD Chamber of Commerce and Industry, appreciated the continuous softening of CPI inflation.

“In the recent months, inflation has come down significantly due to continuous softening in housing inflation from 3.2 per cent in January to 2.6 in April, fuel and light from (-) 0.6 per cent in January to (-) 4.2 per cent in April and clothing and footwear categories from 3.3 per cent in January to 2.8 per cent in April," he said.

However, inflation is still sticky in food and beverages at 7.8 per cent in April.

"Proactive measures by the government to strengthen the supply chains are leading to softening of inflation in many items," he added.

Aditi Nayar, Chief Economist, Head Research and Outreach, ICRA, said that the impending favourable base effects during Q2 of FY2025 are expected to materially soften the headline inflation print to 2.0-4.0 per cent in July and August.

“Nevertheless, a timely onset and well distribution of monsoon season would be crucial to support agriculture output in 2024-25 and help control food inflation," she said.

Experts said that going forward, the inflation trajectory is expected to become normal by September/October 2024 as many of the kharif crops will be entering the mandis and supplementing the existing supply.

"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," said Radhika Rao, Executive Director and Senior Economist, DBS Bank.