Inflation likely to hover around 13.5-14.5% in May 2024: Ministry

May 29, 2024 (MLN): Inflation is projected to hover around 13.5-14.5% in May 2024, with expectations of a decrease to 12.5-13.5% by June 2024, according to the Finance Ministry's monthly economic report.

At the same time, MG Research estimates show inflation will likely ease to 13.9% in May.

The inflation outlook for May 2024 continues on a downward trajectory, attributed to elevated inflation levels previous year and improvements in domestic supply chain of perishable items, staple food like wheat and reduction in transportation costs.

The government's commitment to curbing inflation through stringent administrative measures paints a promising picture for the inflation outlook, the report noted.

A key pillar in this strategy is the bolstered availability of food items, which is crucial for taming inflationary pressures.

By consistently managing supply and demand, the government stabilizes prices and reduces market volatility, it added.

In May 2024, petroleum product prices dropped twice, positively impacting the CPI for the month. Lower fuel prices reduced transportation costs, contributing to this favorable CPI trend.

The SPI has recorded a decline for the sixth consecutive week which augur well for CPI outlook.

The CPI inflation stood at 17.3% on a year-on-year basis in April 2024 as compared to 36.4% in April 2023.

The major drivers include Housing, water, electricity, gas & fuel, Perishable food items, Furnishing & Household equipment maintenance, Clothing & Footwear and Transport.

During Jul-Apr FY 2024, CPI stood at 26.0% against 28.2% in the same period last year. On Month on Month (MoM) basis, it decline by 0.4% in April 2024 compared to an increase of 1.7% in the previous month.

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