Friday September 14 2018
India August Wholesale Inflation Slows to 4-Month Low
Office of the Economic Adviser l Rida | rida@tradingeconomics.com

Wholesale prices in India rose by 4.53 percent year-on-year in August of 2018, after a 5.09 percent gain in the prior month and below market estimates of 4.65 percent. It is the lowest wholesale inflation since April, as cost of fuel increased at a softer pace while prices of food declined further.

In August, cost rose at a slower rate for fuel and power (17.73 percent  from 18.10 percent in July). In addition, cost of primary articles declined by 0.15 percent, after a 1.73 percent rise in a month earlier as cost of food dropped further (-4.04 percent from -2.16 percent in July), namely onion (-26.8 percent); vegetables (-20.18 percent) and fruits (-16.4 percent). Meantime, cost of manufactured products went up 4.43 percent, following a 4.26 percent gain in July.

On a monthly basis, wholesale prices increased by 0.3 percent, compared to a 0.4 percent rise in July.




Wednesday September 12 2018
India Inflation Rate Down to 10-Month Low of 3.69%
Joana Taborda | joana.taborda@tradingeconomics.com

Annual consumer inflation in India declined to 3.69 percent in August of 2018 from 4.17 percent in July and below market expectations of 3.86 percent. It is the lowest inflation rate since October of 2017, mainly due to a sharp slowdown in food cost.

Food and beverages inflation went down to 0.85 percent in August from 1.73 percent in July and the food index alone rose 0.29 percent, well below 1.37 percent in July. Inflation slowed for fruits (3.57 percent compared to 6.98 percent in July); prepared meals, snacks, sweets etc. (4.16 percent compared to 4.46 percent); milk and products (2.66 percent compared to 2.96 percent); and eggs (6.96 percent compared to 7.41 percent). Also, prices fell for vegetables (-7 percent compared to -2.19 percent); pulses and products (-7.76 percent compared to -8.91 percent); and sugar and confectionery (-5.45 percent compared to -5.81 percent). On the other hand, prices rose faster for non-alcoholic beverages (1.86 percent compared to 1.4 percent); oils and fats (3.47 percent compared to 2.79 percent); spices (2.88 percent compared to 2.66 percent); and meat and fish (3.21 percent compared to 2.26 percent). 

Among non-food products, prices rose at a softer pace for: housing (7.59 percent compared to 8.3 percent); clothing and footwear (4.88 percent compared to 5.28 percent); pan, tobacco and intoxicants (5.34 percent compared to 6.34 percent); and miscellaneous (5.52 percent compared to 5.8 percent). Inflation rose for fuel and light (8.47 percent compared to 7.96 percent).

The corresponding provisional inflation rates for rural and urban areas were 3.41 percent and 3.99 percent, compared with July's figures of 4.11 percent and 4.32 percent respectively.

On a monthly basis, consumer prices increased 0.43 percent in August, after a 0.94 percent gain in July.




Friday August 31 2018
India GDP Growth Highest in Over 2 Years
Joana Taborda | joana.taborda@tradingeconomics.com

The Indian economy grew 8.2 percent year-on-year in the second quarter of 2018, above 7.7 percent in the previous three months and beating market expectations of 7.6 percent. It is the strongest growth rate since the first quarter of 2016, boosted by household spending, financial, real estate and manufacturing activities.

Faster increases were seen in household spending (8.6 percent compared to 6.7 percent in Q1) and inventories (8.6 percent compared to 7.8 percent). Also, exports jumped 12.7 percent, much higher than a 3.6 percent rise in the previous period. Imports also increased at a faster 12.5 percent (10.9 percent in Q1). On the other hand, government consumption (7.6 percent compared to 16.8 percent) and gross fixed capital formation (10 percent compared to 14.4 percent) slowed. Household spending accounted for 54.9 percent of the GDP; gross fixed capital formation for 31.6 percent; public expenditure for 11.8 percent; and changes in stocks for 0.7 percent. Exports accounted for 21.4 percent while imports subtracted 24.7 percent.

Gross Value Added, that is, GDP excluding taxes expanded 8 percent, higher than 7.6 percent in Q1. Faster growth was recorded for financial, real estate and professional services (6.5 percent compared to 5 percent in Q1); manufacturing (13.5 percent compared to 9.1 percent); and agriculture, forestry and fishing (5.3 percent compared to 4.5 percent). On the other hand, a slowdown was recorded for trade, hotels, transport, communication and services related to broadcasting (6.7 percent compared to 6.8 percent); public administration and defense (9.9 percent compared to 13.3 percent); construction (8.7 percent compared to 11.5 percent); mining and quarrying (0.1 percent compared to 2.7 percent); and utilities (7.3 percent compared to 7.7 percent). Financial and real estate activities were the biggest sector of the economy (24.1 percent), followed by internal trade (18.9 percent); manufacturing (18 percent); agriculture (13.3 percent); public sector (12.4 percent); construction (7.9 percent); mining (3.2 percent) and utilities (2.3 percent). 




Tuesday August 14 2018
India July Wholesale Inflation Slows to 5.09%
Office of the Economic Adviser l Rida | rida@tradingeconomics.com

Wholesale prices in India rose by 5.09 percent year-on-year in July of 2018, after a 5.77 percent gain in the prior month. Figure came in below market estimates of 5.24 percent, as prices of of food fell sharply while cost of manufactured products and fuel went up faster.

In July, cost of primary articles increased much slower (1.7.3 percent from 5.3 percent in June), as cost of food declined (-2.16 percent from 1.8 percent in a month earlier), namely potato (-42.45 percent); onion (-9.5 percent)l and fruits (2.71 percent). Meantime, cost rose at a higher rate for manufactured products (4.26 percent from 417 percent), and fuel and power (18.10 from 16.18 percent). 

On a monthly basis, wholesale prices increased by 0.4 percent, compared to a 1.1 percent rise in June.


Monday August 13 2018
India July Inflation Rate Weaker than Expected
Joana Ferreira | joana.ferreira@tradingeconomics.com

India' annual inflation rate eased to 4.17 percent in July 2018 from a downwardly revised 4.92 percent in the previous month, and below market expectations of 4.51 percent. Still, inflation remained above the central bank's medium-term target of 4 percent for nine consecutive months.

Food and beverages inflation went down to 1.73 percent in July from 3.11 percent in June, with the food index alone rising 1.37 percent (vs 2.91 percent in June). Inflation slowed for fruits (6.98 percent vs 10.06 percent); prepared meals, snacks, sweets etc. (4.46 percent vs 4.76 percent); milk and products (2.96 percent vs 3.04 percent); and non-alcoholic beverages (1.40 percent vs 1.96 percent). In addition, there was a decline in prices of vegetables (-2.19 percent vs 7.80 percent); pulses and products (-8.91 percent vs -10.87 percent); and sugar and confectionery (-5.81 percent vs -7.11 percent). On the other hand, inflation picked up for eggs (7.41 percent vs 5.85 percent); oils and fats (2.79 percent vs 2.62 percent); spices (2.66 percent vs 2.29 percent); and meat and fish (2.26 percent vs 2.20 percent). 

Among non-food products, prices rose at a softer pace for: housing (8.30 percent vs 8.45 percent); clothing and footwear (5.28 percent vs 5.60 percent); and pan, tobacco and intoxicants (6.34 percent vs 8.05 percent). Inflation rose for both fuel and light (7.96 percent vs 7.22 percent); and miscellaneous (5.80 percent vs 5.66 percent). 

The corresponding provisional inflation rates for rural and urban areas were 4.11 percent and 4.32 percent, compared with June's figures of 4.93 percent and 4.85 percent respectively.

On a monthly basis, consumer prices increased 0.94 percent in July, after a revised 0.51 percent gain in June.


Wednesday August 01 2018
India Raises Key Rate to 6.5%
RBI | Joana Taborda | joana.taborda@tradingeconomics.com

The Reserve Bank of India increased its benchmark policy repo rate by 25bps to 6.5 percent on August 1st 2018, in line with market expectations and following a similar hike in the previous meeting. Policymakers mentioned uncertainty around inflation and slightly increased forecasts for H2 2018-19 to 4.8 percent from 4.7 percent. Although the central bank considers growth momentum is sustained, it noticed several global risks that could weigh on the outlook, including rising trade protectionism, geopolitical tensions and higher oil prices.

Policymakers reinforced that the decision is consistent with a neutral monetary policy stance and is in line with achieving the inflation target of 4 percent +/- 2 percent while supporting growth.

The reverse repo rate was also adjusted to 6.25 percent from 6 percent and the marginal standing facility rate and the Bank Rate to 6.75 percent from 6.5 percent.

Excerpts from the RBI Press Release:

The inflation outlook is likely to be shaped by several factors. First, the central government has decided to fix the minimum support prices (MSPs) of at least 150 per cent of the cost of production for all kharif crops for the sowing season of 2018-19. This increase in MSPs for kharif crops, which is much larger than the average increase seen in the past few years, will have a direct impact on food inflation and second round effects on headline inflation. Second, the overall performance of the monsoon so far augurs well for food inflation in the medium-term. Third, crude oil prices have moderated slightly, but remain at elevated levels. Fourth, the central government has reduced Goods and Services Tax (GST) rates on several goods and services. This will have some direct moderating impact on inflation, provided there is a pass-through of reduced GST rates to retail consumers. Fifth, inflation in items excluding food and fuel has been broad-based and has risen significantly in recent months, reflecting greater pass-through of rising input costs and improving demand conditions. Finally, financial markets continue to be volatile. Based on an assessment of the above-mentioned factors, inflation is projected at 4.6 per cent in Q2, 4.8 per cent in H2 of 2018-19 and 5.0 per cent in Q1:2019-20, with risks evenly balanced. Excluding the HRA impact, CPI inflation is projected at 4.4 per cent in Q2, 4.7-4.8 per cent in H2 and 5.0 per cent in Q1:2019-20.

Turning to the growth outlook, various indicators suggest that economic activity has continued to be strong. The progress of the monsoon so far and a sharper than the usual increase in MSPs of kharif crops are expected to boost rural demand by raising farmers’ income. Robust corporate earnings, especially of fast moving consumer goods (FMCG) companies, also reflect buoyant rural demand. Investment activity remains firm even as there has been some tightening of financing conditions in the recent period. Increased FDI flows in recent months and continued buoyant domestic capital market conditions bode well for investment activity. The Reserve Bank’s IOS indicates that activity in the manufacturing sector is expected to remain robust in Q2, though there may be some moderation in pace. Rising trade tensions may, however, have an adverse impact on India’s exports. Based on an overall assessment, GDP growth projection for 2018-19 is retained, as in the June statement, at 7.4 per cent, ranging 7.5-7.6 per cent in H1 and 7.3-7.4 per cent in H2, with risks evenly balanced; GDP growth for Q1:2019-20 is projected at 7.5 per cent.

The MPC notes that domestic economic activity has continued to sustain momentum and the output gap has virtually closed. However, uncertainty around domestic inflation needs to be carefully monitored in the coming months. In addition, recent global developments raise some concerns. Rising trade protectionism poses a grave risk to near-term and long-term global growth prospects by adversely impacting investment, disrupting global supply chains and hampering productivity. Geopolitical tensions and elevated oil prices continue to be the other sources of risk to global growth. 




Monday July 16 2018
India June Wholesale Inflation at 15-Month High of 5.77%
Office of the Economic Adviser l Rida | rida@tradingeconomics.com

Wholesale prices in India rose by 5.77 percent year-on-year in June of 2018, after a 4.43 percent gain in the prior month and above market estimates of 4.93 percent. It is the highest wholesale inflation since March 2017, due to faster rises in cost of food, manufactured products, and fuel.

In June, cost of primary articles increased much faster (5.3 percent from 3.16 percent in May), as cost of food went up more (1.8 percent from 1.6 percent in a month earlier), namely potato (99.02 percent); fruits (3.87 percent); and onion (18.3 percent). Also, cost rose at a higher rate for manufactured products (4.17 percent from 3.73 percent), and fuel and power (16.18 percent from 11.22 percent). 

On a monthly basis, wholesale prices increased by 1.1 percent, compared to a 0.9 percent rise in May.


Thursday July 12 2018
India Consumer Inflation Below Forecasts
Joana Taborda | joana.taborda@tradingeconomics.com

The inflation rate in India edged up to 5 percent in June of 2018 from 4.87 percent in May, below market expectations of 5.3 percent. Still, it is the highest rate since January and marks the eighth straight month in which inflation is above the central bank medium-term target of 4 percent.

Food and beverages inflation went down to 3.18 percent from 3.37 percent in May, with the food index alone rising 2.91 percent (3.1 percent in May). Inflation slowed for fruits (10.13 percent vs 12.33 percent); vegetables (7.8 percent vs 8.04 percent); prepared meals, snacks, sweets etc. (4.83 percent vs 4.98 percent); meat and fish (2.41 percent vs 3.53 percent); milk and products (3.04 percent vs 3.2 percent); and prices continued to fall for both pulses and products (-10.87 percent vs -11.57 percent) and sugar and confectionery (-7.11 percent vs -8.12 percent). On the other hand, prices rose faster for eggs (5.85 percent vs 5.78 percent); oils and fats (2.62 percent vs 2.46 percent); non-alcoholic beverages (1.96 percent vs 1.8 percent); and spices (2.37 percent vs 1.54 percent). 

Prices also rose at a faster pace for: housing (8.45 percent vs 8.4 percent in May); fuel and light (7.14 percent vs 5.8 percent); clothing and footwear (5.67 percent vs 5.47 percent); pan, tobacco and intoxicants (8.05 percent vs 8 percent); and miscellaneous (5.74 percent vs 5.35 percent). 

The corresponding provisional inflation rates for rural and urban areas were 5 percent and 4.85 percent, compared with May's figures of 4.88 percent and 4.72 percent respectively.

On a monthly basis, consumer prices increased 0.57 percent in June, after a 0.51 percent gain in May.


Thursday June 14 2018
India Wholesale Inflation at 15-Month High of 4.43% in May
Office of the Economic Adviser l Rida | rida@tradingeconomics.com

Wholesale prices in India rose by 4.43 percent year-on-year in May of 2018, after a 3.18 percent gain in the prior month and above market estimates of 3.76 percent. It is the highest wholesale inflation since March 2017, driven by faster rises in cost of food, manufactured products, and fuel.

In May, cost of primary articles increased much faster (3.16 percent from 1.41 percent in April), as cost of food advanced more (1.6 percent from 0.87 percent in a month earlier), namely potato (81.93 percent); fruits (15.4 percent); and onion (13.2 percent). Also, cost went up at a higher rate for manufactured products (3.73 percent from 3.11 percent), and fuel and power (11.22 percent from 7.85 percent). 

On a monthly basis, wholesale prices increased by 0.9 percent, compared to a 0.7 percent rise in April.


Tuesday June 12 2018
India Inflation Rate Rises to 4.87% in May
Joana Taborda | joana.taborda@tradingeconomics.com

India's annual inflation rate rose to 4.87 percent in May of 2018 from 4.58 percent in April, slightly above market expectations of 4.83 percent. It is the highest reading in four months amid rising prices for food and fuel.

Food and beverages inflation went up to 3.37 percent from 3 percent in April, with the food index alone rising 3.1 (2.80 percent in April). Upward pressure came from prices of fruits (12.33 percent vs 9.65 percent); vegetables (8.04 percent vs 7.29 percent); eggs (5.78 percent vs 6.26 percent); prepared meals, snacks, sweets etc. (4.98 percent vs 4.85 percent); meat and fish (3.53 percent vs 3.59 percent); milk and products (3.2 percent vs 3.21 percent); oils and fats (2.46 percent vs 2.11 percent); non-alcoholic beverages (1.8 percent vs 1.73 percent); and spices (1.54 percent vs 1.25 percent). On the other hand, prices fell for both pulses and products (-11.57 percent vs -12.35 percent) and sugar and confectionery (-8.12 percent vs -4.05 percent). 

Prices also rose at a faster pace for: fuel and light (5.8 percent vs 5.24 percent); clothing and footwear (5.47 percent vs 5.11 percent); pan, tobacco and intoxicants (8 percent vs 7.91 percent); and miscellaneous (5.35 percent vs 4.96 percent). In constrast, inflation eased for housing (8.4 percent vs 8.50 percent in April).

The corresponding provisional inflation rates for rural and urban areas were 4.88 percent and 4.72 percent, compared with April's figures of 4.67 percent and 4.42 percent respectively.

On a monthly basis, consumer prices increased 0.51 percent in May, after a 0.44 percent gain in April.