CPI 12 May 2024

Bhavesh Sanghvi

May 14, 2024

Here are the key points from the April’24 CPI:

  • Inflation remained stable and within the RBI’s acceptable range. However, increased prices of fruits and vegetables due to seasonal factors added pressure to the food prices. The RBI has highlighted the importance of monitoring food price inflation closely, although expectations of a normal monsoon in the second half of FY25 may alleviate some concerns. With inflation above 4% and strong economic growth, it is anticipated that the Monetary Policy Committee (MPC) will maintain its pause on interest rates.
  • Headline inflation remained steady at 4.9% compared to the previous month and 4.7% from April’23, with a sequential price rise of +48 basis points.
  • Core CPI continued its downward trend for the eleventh consecutive month, decreasing to 3.2% from 3.3% in the last month, with a monthly increase of 55 basis points compared to 17 basis points previously.
  • Food and beverage prices, particularly fruits, experienced a significant increase, contributing to a 63 basis points rise in food inflation compared to a 21 basis points rise in the previous month.
  • Fuel and light prices saw a 1% decrease compared to a cumulative 2.8% deflation over the last two months. Housing prices increased by 1%, while prices for pan/tobacco and clothing rose by 0.4% and 0.2%, respectively.
  • Services inflation accelerated to 0.6% compared to a 0.2% rise over the past four months, with the highest increase observed in personal care (0.3%). Transport & communication prices fell by -0.2%.
  • The gap between rural and urban CPI narrowed slightly, with rural inflation easing to 5.4% from 5.5% in the previous month, while urban inflation remained stable at 4.1%.

In summary, CPI remained stable at 4.9%, with core CPI easing to 3.2%. Food inflation was driven by increases in fruit and vegetable prices, while services inflation increased, led by personal care. The rural-urban CPI gap narrowed slightly.