Inflation Relief on the Horizon

According to a recent report by Morgan Stanley, India's Consumer Price Index (CPI) inflation is projected to decline to 5.5% year-on-year in November, down from 6.2% in October. This anticipated drop is primarily attributed to falling food prices and a deceleration in core CPI, which includes goods and services excluding food and fuel.

The report highlights that the monthly index is expected to register a sequential decline, offering relief to both policymakers and consumers. High food prices have been a significant driver of elevated inflation in recent months, making this decline particularly noteworthy. Additionally, the fall in fuel prices further supports the downward trend, easing pressure on household budgets and businesses.

This moderation in CPI inflation aligns with the Reserve Bank of India's (RBI) efforts to maintain price stability while supporting economic growth. If inflation trends continue to ease, it could provide the central bank with more flexibility in its monetary policy decisions.

Vegetable Prices Key to Decline

Another report by Union Bank of India also anticipates a similar easing of inflation to 5.4% in November 2024. The decline is largely attributed to a seasonal drop in vegetable prices, which had surged significantly in the previous months. Notably, vegetable price inflation, which recorded a 42% year-on-year increase in October—the highest since January 2020—is estimated to have dropped to 27% in November, driven mainly by a reduction in tomato prices.