India's food inflation expected to ease by Q4:2024-25 on better kharif arrivals and rising prospects of a good rabi season, despite a significant pick-up in September inflation print, according to minutes of the Reserve Bank of India (RBI) monetary policy committee's latest meeting.

"Beyond the short-term, however, the outlook for food inflation is becoming more
favourable with improvement in kharif and rabi season prospects. Core inflation, in
absence of a major cost-push shock, is likely to remain contained on continuing
transmission of past monetary policy actions. These considerations have resulted in
inflation projection of 4.5 percent for 2024-25," said RBI Governor Shaktikanta Das in the minutes that was released on October 23.

India’s retail inflation rose to a nine-month high of 5.5 percent in September after remaining below 4 percent for the previous two months owing to higher food inflation, dimming hopes of a rate cut in December.

"Sowing of key kharif crops are higher than last year and the long-period average. Sufficient buffer stocks for cereals are available for ensuring food security. Adequate reservoir levels, the likelihood of a good winter and favorable soil moisture conditions augur well for the ensuing rabi
season, though adverse weather events remain a risk," the meeting minutes said.

"Taking all these factors into consideration, CPI inflation for 2024-25 is projected at 4.5 percent with Q2 at 4.1 percent; Q3 at 4.8 percent; and Q4 at 4.2 percent. CPI inflation for Q1:2025-26 is projected at 4.3 percent. The risks are evenly balanced," it added.

(This is a developing story)