India’s retail inflation, measured by the Consumer Price Index (CPI), will likely fall to 4.3-4.4% in FY25 from an estimated 5.4% in the current fiscal year, the Centre for Monitoring Indian Economy (CMIE) said in an article.
The Reserve Bank of India (RBI) has projected CPI inflation to average 4.5% in FY25.
“Our forecast for fiscal year FY25 has been made under the assumption of a normal supply of major vegetables, namely potatoes, onions, and tomatoes. Thus, we have assumed that the prices of these commodities will not display too much volatility during the year,” according to the article written by Sameeksha Kumar.
The author expects core CPI inflation to average 5% in FY25, about 50 basis points (bps) more than the current fiscal. “This is primarily on account of an expected rise in prices in the miscellaneous group,” she said. The miscellaneous group carries a weight of 28.3% in the CPI basket and comprises mainly services.
CMIE doesn’t expect any major change in prices of crude oil from the current levels in the upcoming fiscal. It has projected the price of Indian crude oil basket to average $83.1 per barrel in FY25, about 1% higher than the basket’s average price in FY24.
“With no significant rise in crude oil prices, Oil Marketing Companies (OMCs) are unlikely to raise petrol and diesel prices higher than the current rates,” the artucle said.
The agency further expects food inflation to average around 3.5-3.7% in 2024-25. “Overall food prices are expected to display only a normal rise,” according to Kumar.
Rice prices are expected to moderate a bit after the arrival of the rabi harvest in May 2024, and so is that of wheat. Prices of most major pulses are also expected to ease, barring that of tur.