Indian Meteorological Department (IMD) forecasts intense heatwave conditions to prevail over Apr-May-Jun 2024. A warmer summer can have implications for inflation, especially perishables (fruits, vegetables, milk).

Download Report
Apr 09, 2024

QuantEco Research || QuantEco Shots - Heatwaves and implications for CPI inflation

A positive deviation in max temperature versus normal (all-India average) is found to have a significant impact on perishables inflation only in month of May. Statistically, one degree celsius of deviation of max temperature vs. normal in May, adds ~200 bps to perishables MoM momentum. This could translate into ~25-30 bps of upward bias to headline CPI inflation estimates for FY25, ceteris paribas.

Hopefully, the longevity of this heatwave phase and its impact on food prices will be limited to Q1 FY25. Anticipation of a ‘normal monsoon’ as ENSO conditions turn neutral from El Nino, should offer respite to prices by end Jun-24/early Jul-24. Private forecaster SkyMet has pegged 2024 monsoon at 102% of LPA.