Capital Market has conducted a poll amongst economists across leading banks, rating agencies, financial advisories and brokerages for June 2024 CPI inflation projections. The results of the poll as indicated by the median of CPI inflation forecasts from economists, shows that CPI inflation would remain flat at 4.8% in June 2024 from 4.8% reading in May 2024.

The economists in the poll have projected the CPI inflation in the narrow range of 4.6% to 4.9% for June 2024. The median of various CPI inflation forecast received from economists stood at 4.8%, while the average also stood at 4.8% for June 2024.

CPI Inflation: May 2024

The all-India general CPI inflation declined to 4.75% in May 2024 (new base 2012=100), compared with 4.83% in April 2024. The corresponding provisional inflation rate for rural area was 5.28% and urban area 4.15% in May 2024 as against 5.43% and 4.11% in April 2024. The core CPI inflation declined to 3.12% in May 2024 compared with 3.25% in April 2024.

The cumulative CPI inflation has rose to 4.79% in April-May FY2025 compared with 4.51% in April-May FY2024.

Among the CPI components, inflation of food and beverages increased to 7.87% in May 2024 from 7.87% in April 2024. Within the food items, the inflation for oils and fats increased to (-) 6.71%, fruits 6.68% and vegetables 27.33%. Further, the inflation for pulses and products rose to 17.14%, egg 7.62% and cereals and products 8.69%. However, the inflation for spices declined to 4.27%, meat and fish 7.28% and milk and products 2.62% and prepared meals, snacks, sweets etc. 3.35% and sugar and confectionery 5.70% and non-alcoholic beverages 2.42% in May 2024.

The inflation for housing declined to 2.56%, while that for miscellaneous items eased to 3.41% in May 2024. Within the miscellaneous items, the inflation for transport and communication declined to 0.97%, household goods and services 2.51%, education 4.07%, health 4.20% and recreation and amusement 2.51%, while the inflation for personal care and effects increased to 7.72% in May 2024.

The inflation for clothing and footwear declined to 2.74%, while the CPI inflation of fuel and light rose to (-) 3.83% in May 2024.

FAO Food Price Index: June 2024

The benchmark for world food commodity prices was unchanged in June, as increases in international quotations for vegetable oils, sugar and dairy products offset a decrease in those for cereals, the Food and Agriculture Organization of the United Nations (FAO) reported Friday.

The FAO Food Price Index, which tracks monthly changes in the international prices of a set of globally-traded food commodities, averaged 120.6 points in June, the same as its revised figure for May. The index is now 2.1% lower than its year-earlier value and 24.8% below its March 2022 peak.

The FAO Cereal Price Index declined by 3.0% in June from May, with quotations for coarse grains, wheat and rice all down, driven in part by improved production prospects in major exporting countries.

The FAO Vegetable Oil Price Index, by contrast, rose 3.1% from May, buoyed by reviving global import demand for palm oil and firm demand from the biofuel sector in the Americas for soy and sunflower oils.

The FAO Sugar Price Index increased by 1.9% from May after three consecutive monthly declines, due in large part to concerns over the likely impact of adverse weather and monsoons on production in Brazil and India.

The FAO Dairy Price Index rose by 1.2%, with international quotations for butter reaching a 24-month high on the back of increased global demand for near-term deliveries amidst strong retail sales, seasonally falling milk deliveries in Western Europe and low inventories in Oceania.

The FAO Meat Price Index was virtually unchanged in June, as slight increases in the world prices of ovine, pig and bovine meats nearly offset a supply-led decline in international poultry meat prices.

Outlook

The WPI inflation continued to increase for third straight month, with core WPI and manufactured production inflation returning to positive zone after remaining in negative zone for last 14 straight months. On the other hand, CPI inflation declined marginally in May 2024. The Reserve Bank of India projects CPI inflation for 2024-25 at 4.5%. The pickup in southwest monsoon rainfall and surge in kharif crop sowing augurs well for agriculture crop output softening of food inflation. Volatility in crude oil prices and financial markets along with firming up of non-energy commodity prices pose upside risks to inflation.