CPI inflation fell to 4.9% in Mar’24 from 5.1% in Feb’24. The non-food segment, which accounts for 54% of the CPI basket, only contributed 27% to the overall inflation. Food, which accounts for 46% of the CPI basket, contributed 73% to the overall inflation. Moreover, the major source of overall inflation is just three commodities, namely vegetables, cereals and pulses. These three items represent only 18% of the CPI basket, yet they contributed to 55% of the overall inflation in Mar’24.
Outlook: The inflation in these agricultural commodities is unlikely to decrease anytime soon due to the wages of agri workers, which have already been increasing. Additionally, there is a roughly 10% wage increase announced in the Govt. rural employment guarantee scheme which is implemented from April 2024. These wages often serve as a benchmark for determining wages for agricultural workers.
