Inflation expected to average 4.5% for current fiscal year: CRISIL

Leading ratings and economic research firm CRISIL expects inflation to average 4.5% for the current financial year. Assuming a normal monsoon, we anticipate food inflation to ease, while non-food inflation may rise slightly but should remain low due to stable commodity prices, CRISIL stated. The firm noted that consumer price index (CPI) inflation slightly decreased to 4.75% in May from 4.8% in April 2024. Non-food categories reduced headline inflation, but the continuous rise in food categories, especially cereals and pulses, is concerning, the CRISIL report mentioned. Food inflation has stayed above 8.5% for four months, while non-food inflation has provided some relief.

The report suggests a potential rebalancing in domestic demand this fiscal year, with rural demand catching up to urban consumption. An expected above-normal monsoon bodes well for rural incomes. However, the urban economy might be affected by tighter credit conditions. Bank retail credit growth has slowed, and regulatory measures to limit bank lending to NBFCs will also impact consumer loans.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.