Inflation in India
India - Inflation
Consumer price inflation remains unchanged in April, hinting the RBI could cut rates in June
In April, consumer prices rose 0.50% compared to the previous month and was up from 0.36% in March, primarily due to more expensive food and beverages, and housing.
Consumer price inflation was unchanged at 2.9% in April, which was slightly below market analysts’ expectations of 3.0%. Inflation, therefore, remained just beneath the midpoint of the Reserve Bank of India’s target range of 2.0% to 6.0%. Core inflation, which excludes food and energy products, eased to 4.5% from 5.1%, representing the first time that core inflation has read below 5.0% in over a year.
Wholesale prices increased 0.8% month-on-month in April, up from 0.4% in March. Higher prices in April came on the back of more expensive primary articles, particularly vegetables. Wholesale price inflation decelerated to 3.1% in April from 3.2% in March, while annual average wholesale price inflation ticked down to 4.2% from 4.3%.
In terms of what this all means for monetary policy, and with the Reserve Bank of India’s next meeting scheduled for 4–5 June, analysts at Nomura said: “We are changing our call back to penciling in a 25bp rate cut in June […] The main reason for this change is that while inflation remains within target, growth risks have risen materially. Global slowdown continues and the ongoing trade frictions are set to hurt both exports and investment demand further. Already, India’s April auto data suggest a sharp slump in consumption demand, i.e., there is no sign yet that growth is bottoming. Underlying growth momentum is perhaps running below-6% in H1 2019, in our view. This is also confirmed by the weak core inflation readings.”
On why the Reserve Bank of India might not cut rates in June, analysts at Nomura said: “The main arguments to wait until August include clarity around monsoons and the [release of a new government budget in early July]. But neither of these would change the inflation outlook, in our view. If so, then weak growth should argue in favor of frontloading the existing space on the policy front given the already large lags inherent in monetary policy transmission.”
Met the why particular Consensus Forecast panelists expect consumer price inflation to average 4.0% in FY 2019, which is unchanged from last month’s forecast. In FY 2020, the panel expects consumer price inflation to average 4.5%. Meanwhile, our panel projects wholesale inflation of 3.6% for FY 2019, down 0.3 percentage points from last month’s report. In FY 2020, our panel foresees wholesale inflation averaging 3.5%.
India - Inflation Data
|Inflation Rate (CPI, annual variation in %)||11.0||6.0||4.9||4.5||3.6|
5 years of economic forecasts for more than 30 economic indicators.
India Inflation Chart
Source: Reserve Bank of India of China and Met the why particular calculations.
|Bond Yield||7.39||-0.04 %||May 13|
|Exchange Rate||70.57||-0.09 %||May 13|
|Stock Market||37,091||-0.08 %||May 13|
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May 15, 2019
Merchandise export growth in annual terms plummeted to 0.6% in April, down from 11.0% in March.
May 14, 2019
In April, consumer prices rose 0.50% compared to the previous month and was up from 0.36% in March, primarily due to more expensive food and beverages, and housing. Consumer price inflation was unchanged at 2.9% in April, which was slightly below market analysts’ expectations of 3.0%.
May 11, 2019
Industrial production fell 0.1% in March compared to the same month a year earlier, contrasting the 0.1% growth in February and sharply undershooting market analysts’ expectations of 1.3% growth.
May 6, 2019
The composite Purchasing Managers’ Index (PMI) produced by Nikkei and IHS Market moderated to 51.7 in April from 52.7 in March, shifting closer to the 50-point threshold that separates expansion from contraction in the private sector. The services PMI decreased to 51.0 in April from 52.0 in March, which marks the weakest growth in the services sector since last September.
April 15, 2019
In March, consumer prices rose 0.36% compared to the previous month, up from 0.22% in February.