## Inflation Remains Above 4% in FY24, But Economic Activity Shows Signs of Improvement
India's retail inflation remained above 4% for the entire fiscal year 2024. However, there are positive signs emerging from the economic activity front.
Consumer price index (CPI) based food inflation eased marginally to 4.85% in March 2024 from 5.09% a month earlier.
Overall retail inflation remained above 4% for the entire FY24.
Food inflation continued to be a concern, with CPI based food inflation remaining high at 8.52% in March.
Factory output, as measured by the index of industrial production (IIP), rose to a four-month high of 5.7% in February 2024.
This suggests that economic activity is on a surer footing.
The Reserve Bank of India (RBI) has forecast robust growth prospects for FY25, with GDP growth estimated at 7%.
However, the RBI remains vigilant over inflation and has projected it at 4.5% for the full fiscal and 4.9% for the first quarter.
The RBI's monetary policy committee is mandated to target retail inflation at 4% with a variation band of 2% on both sides.
Analysts believe that the inflation data is in line with market expectations and is unlikely to significantly impact the RBI's policy decisions.
They expect monetary easing to be back-ended in 2024, pending clarity on factors such as the monsoon, crude oil prices, and US Fed rate action.
Overall, the Indian economy is showing signs of improvement, with economic activity picking up. However, inflation remains a concern, and the RBI is likely to maintain a cautious stance on monetary policy.