India Inflation April 2024

India: Inflation drops to 11-month low in April

Inflation inched down to 4.8% in April, which followed March’s 4.9%. April’s figure marked the weakest inflation rate since May 2023 and was largely in line with market expectations. Price pressures decelerated for housing plus clothing and footwear and turned more negative for fuel and light. That said, food inflation remained elevated, remaining above headline inflation for the eleventh month running. Meanwhile, core inflation declined to 3.2% from 3.3–3.4%, according to economist estimates.

The trend was unchanged, with annual average inflation coming in at March’s 5.4% in April.

Finally, consumer prices rose 0.48% from the previous month in April, following March’s flat result. April’s uptick was the sharpest month-on-month increase in prices since November 2023.

Our panelists expect inflation to trend down ahead, largely on the Central Bank’s past hikes to interest rates. That said, inflation will remain above the midpoint of the Central Bank’s 2.0–6.0% target range until the end of 2025. Strong rises in food prices are expected to continue supporting price pressures ahead. Moreover, domestic demand continues to fire on all cylinders, stoking services inflation. Adverse weather damaging crops—and thus raising food prices further—is an upside risk.

Nomura’s Sonal Varma and Aurodeep Nandi said:

“Overall, we expect headline inflation to moderate from ~4.9% in H1 to an average of 4.3% in H2, led by easing food price inflation, amid the transition towards La Niña after June, and as lower wage growth is likely to keep core inflation tame.”

Santanu Sengupta and Arjun Varma, economists at Goldman Sachs, commented:

“In our view, core inflation has most likely bottomed out this month, and we expect core inflation to increase towards 4.0% in Q3 driven by a rise in core goods inflation due to the lagged impact of a rise in manufacturing costs.”

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