India's April Inflation Seen at 4% as Food, Global Risks Mount

"The upward pressure on prices is visible for Tomato, Onion, edible oils and other miscellaneous items," the Bank of Baroda report stated. It noted that the "increase in prices is more entrenched this month."

"Against this backdrop, we expect CPI to settle at 4% in Apr'26, with risks tilted to the upside," the report stated, highlighting that global energy, metals, and food prices are becoming "stickier" due to the ongoing impact of war, necessitating close monitoring of domestic pass-through, particularly for components like edible oils.

Domestic supply chains face immediate challenges as arrival statistics for Tomato, Onion, and Potato (TOP) declined by 12.8 per cent in April 2026 compared to the same period last year. Heatwave warnings issued by the India Meteorological Department (IMD) for May 2026 over major producing states such as Gujarat, Maharashtra, and the East Coast further threaten these statistics.

The report warned that "arrivals of TOP might be impacted in the coming months and some upside risks to inflation remain."

On the global front, World Bank data indicated that risks are becoming more entrenched. While previous inflationary episodes were concentrated in energy, a spillover is now being felt in global food prices, including cereals and edible oils.

"With no sign of a formal peace deal in place, the pass through of higher input prices from producers to consumers cannot be ruled out," the Bank of Baroda report highlighted. "Thus, risks of imported inflation have increased this month compared to previous months."

The increase in edible oil prices domestically aligns with rising international prices. Within the BOB ECI, 16 out of 20 items witnessed an increase in their inflation rates during April. The steepest climbs were seen in tomatoes, onions, pulses, and specific edible oils such as sunflower, mustard, and soya oil.

However, the report noted that the trajectory for Potato and Onion still sits in "favorable double-digit deflation," and most pulses continue on a deflationary path, with the exception of Masoor dal.

"We expect core inflation (excluding food and fuel) to be ~3.5% in Apr'26. On the other hand, core excluding pan, tobacco, gold, silver and precious metals is expected to be lower at 1.8-1.9% in Apr'26," the report stated.

It also noted that core inflation is likely to be capped, though "upside risk in core inflation emanates from transport inflation and restaurant and hospitality sector" due to higher ATF and commercial cylinder prices.

- ANI