Virendra Pandit
New Delhi: Contrary to the Reserve Bank of India (RBI)’s projections, the leading economic think tank, the Centre for Monitoring Indian Economy (CMIE), said on Monday the country’s inflation may decline for two years in a row.
It is likely to fall to 4.3 percent in 2024-25 from 5.4 percent in 2023-24, which is lower than the RBI’s Consumer Price Index (CPI)) for FY25 at 4.5 percent.
In 2022-23, the inflation rate had increased to 6.7 percent, the highest in nine years, including in 2014-15.
In January, it declined to 5.1 percent from 5.7 percent in December 2023. The forecast of 5.4 percent for 2023-24 would make it the lowest annual inflation rate since the pandemic began.
No interruption in the supply of vegetables and other essential commodities is a key factor in keeping inflation low, CMIE said.
In FY25, the CMIE said, food and beverages inflation will be at 3.4 percent compared to 7.1 percent in FY24 and 6.7 percent in FY23.
Clothing and footwear will record an inflation rate of 4.1 percent, lower than 4.8 percent in 2023-24. At 9.5 percent, it was the highest in a decade in FY23.
Some components are likely to buck the trend. According to the CMIE projections, housing costs are likely to increase, with the inflation rate reaching 4.5 percent in 2024-25, which will be the highest since 2019-20.
Among other components, the increase in the inflation rate will be the highest for pan, tobacco, and intoxicants at 4.7 percent from 3.9 percent in 2023-24, up from 2.2 percent in 2022-23.
The think-tank expects core inflation (excluding food, fuel, and light) to reach 5 percent in 2024-25 from around 4.5 percent in the financial year 2023-24 because of the rise in prices of components in the miscellaneous group.