Capital Market conducted the poll amongst economists for their projections of inflation figure for June 2024. As per the results of poll, the inflation rate is projected to accelerate to 3.6% in June 2024. Economists in the poll have projected WPI inflation in the range of 3.5-3.7% for June 2024. The median of the economists forecast's for inflation of June 2024 stood at 3.6%, while the average was also at 3.6%.

CPI Inflation: June 2024

The all-India general CPI inflation increased to 5.08% in June 2024 (new base 2012=100), compared with 4.80% in April 2024. The corresponding provisional inflation rate for rural area was 5.66% and urban area 4.39% in June 2024 as against 5.34% and 4.21% in April 2024.

The core CPI inflation was nearly flat at 3.15% in June 2024 compared with 3.12% in April 2024.

The cumulative CPI inflation has rose to 4.91% in April-June FY2025 compared with 4.63% in April-June FY2024.

Among the CPI components, inflation of food and beverages increased to 8.36% in June 2024 from 7.87% in April 2024. Within the food items, the inflation for vegetables increased to 29.32%, oils and fats (-) 2.68% and milk and products 3.00%. Further, the inflation for fruits rose to 7.15%, prepared meals, snacks, sweets etc 3.49%, cereals and products 8.75% and sugar and confectionery 5.83%. However, the inflation for meat and fish declined to 5.39%, spices 2.06%, pulses and products 16.07%, egg 3.99% and non-alcoholic beverages 2.36% in June 2024.

The inflation for housing increased to 2.69%, while that for miscellaneous items eased to 3.41% in June 2024. Within the miscellaneous items, the inflation for education declined to 3.57%, health 4.13%, household goods and services 2.39%, recreation and amusement 2.39% and transport and communication 0.97%, while the inflation for personal care and effects increased to 8.18% in June 2024.

The inflation for clothing and footwear declined to 2.73%, while the CPI inflation of fuel and light rose to (-) 3.66% in June 2024.

WPI Inflation: May 2024

The Wholesale Price Index (WPI)-based inflation, base year 2011-12, jumped to 2.6% in May 2024 from 1.3% in April 2024, showing sharp increase for third straight month. Inflation for two major sub-groups - primary articles and manufactured products group increased contributing to the overall increase in inflation in May 2024, while the inflation for fuel and power group eased marginally. The core inflation (manufactured products excluding foods products) turned positive to 0.4% in May 2024 after remaining negative for last 14 straight months from (-) 0.7% April 2024.

The WPI inflation is revised downwards to 0.26% for March 2024 from 0.53% reported at provisional level.

Inflation of primary articles rose to 7.2% in May 2024 from 5.0% in April 2024. Further, manufactured products inflation moved up to 0.8% in May 2024 from (-) 0.4% in April 2024. However, the inflation for fuel and power group inflation eased to 1.3% from 1.4% in April 2024.

Inflation of food items (food articles and food products) increased to 7.4% in May 2024 from 5.5% in April 2024. Meanwhile, inflation of non-food items (all commodities excluding food items) rebounded to 0.7% in May 2024 from (-) 0.4% in April 2024.

The contribution of primary articles to the overall inflation of 2.6% rose to 191 basis points (bps) in May 2024, from contribution of 133 bps to 1.3% inflation in April 2024. The contribution of fuel product group was steady at 18 bps in May 2024, while that of manufactured products turned positive to 47 bps in May 2024 from (-) 26 bps in April 2024.

The contribution of food items (food articles and food products) to inflation of 2.6% in May 2024 increased to 209 bps from 155 bps to 1.3% in April 2024.Meanwhile, the contribution of non-food items (all commodities excluding food items) gained to 50 bps in May 2024 from (-) 26 bps in April 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

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.