India CPI inflation print - No change in prices mom | Fuel disinflation 2.60% mom on Price cuts in LPG / Diesel and Petrol

Headline CPI rose 4.85% yoy and flat mom. Q4 FY24 inflation averaged 5.01% in line with RBIs estimates. 

Largely a benign CPI print with Fuel and Light driving major disinflation. Miscellaneous group (Household G&S, Health, Transport and communication, recreation and amusement, education, personal care and effects) rose 0.28% mom. The fuel disinflation is on account of cut in prices of LPG (Mar 8) / prices of Petrol and Diesel (Re. 2 on Mar 15). 

Prices of Meat and Fish (wt. 3.61%) saw prices rise 1.3% mom. Interestingly, in a retail shop in Bandra from where we buy Meat, the gentleman informed that the price has gone up from Rs. 240 a kg to Rs. 280 a Kg. Price of Fruits (wt 2.5%) saw a 1.77% mom decline. Personal care ad effects category saw 1.37% mom rise in prices. Price of Spices has seen good deceleration over the last 3 months. 

The Core CPI rose 3.25% mom. Going ahead the base effects are going to start kicking in which could impede the momentum of deceleration seen in core prices. The upturn in commodity prices and rising input cost pressures as seen in the price subcomponent across Services and Mfg PMI also suggests a turn in trends in Core CPI. Heatwave alerts issued by Weather agencies pose risks to the food price outlook. 

RBI inflation projections for FY25 are stated below:

What does the inflation print mean for monetary policy?

The in line inflation print does not alter the policy outlook. Considerable uncertainties remain unresolved with Geopolitical conflicts the number one, the rise in commodity prices, weather related uncertainties and U.S monetary policy outlook closely following. 

The space for monetary policy opens in Q2 after election results have been announced and hopefully global uncertainties resolve one way or the other and a new normal is found.