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Dyfed-Powys Police said on Wednesday that it had received a report "of a perceived hate incident" as one of the floats at the event in Aberaeron featured a group who had painted their faces black and sang songs with offensive lyrics.
The float was based on Jamaica's bobsleigh team from the film Cool Runnings.
Labour’s general election candidate for Ceredigion Dinah Mulholland said she was “utterly horrified to see this from Aberaeron Carnival. How on earth could this have been considered acceptable, or even legal, by the carnival organisers?
"There may have been no conscious agenda or racist intent towards involved people of African or Caribbean heritage.
“But there is no doubt that offence has been caused and there is a danger that, unchallenged, such behaviour makes casual racism seem OK."
WalesOnline published a video showing the group of men on the float singing a song with racist lyrics.
