Wednesday November 14 2018
India Wholesale Inflation at 4-Month High of 5.28%
Office of the Economic Adviser l Rida | rida@tradingeconomics.com

Wholesale prices in India rose by 5.28 percent year-on-year in October 2018, after a 5.13 percent gain in the prior month and above market estimates of 5 percent. It was the highest wholesale inflation since June, as cost advanced faster for fuel and manufactured products.

In October, cost went up at a faster rate for fuel & power (18.44 percent vs 16.65 percent) and manufactured products (4.49 percent vs 4.22 percent in September), amid higher prices of basic metals (13.80 percent vs 12.78 percent), food products (1.01 percent vs 0.78 percent), chemical & chemical products (7.60 percent vs 7.19 percent) and textiles (5.59 percent vs 5.04 percent). 

Contrarily, prices of primary articles slowed to 1.79 percent (from a 2.97 percent rise in a month earlier), as cost of food dropped further (-1.49 percent vs -0.21 percent), namely eggs, meat & fish (-0.59 percent vs -0.52 percent), vegetables (-18.65 percent vs -3.83 percent) and onion (-31.69 percent vs -25.23 percent).

On a monthly basis, wholesale prices rose 0.7 percent, the same as in September.




Monday November 12 2018
India Inflation Rate Lowest in Near 1 Year
Joana Taborda | joana.taborda@tradingeconomics.com

Annual consumer inflation in India fell to 3.31 percent in October of 2018 from a downwardly revised 3.7 percent in September and below market expectations of 3.67 percent. It is the lowest inflation rate since September of 2017, mainly due to a drop in cost of food.

Prices of food and beverages declined 0.14 percent, following a 1.08 percent rise in September and the food index alone dropped 0.86 percent, after a 0.51 percent gain in the previous month. It is the biggest fall in food cost since June of 2017. Prices went down for vegetables (-8.06 percent), pulses and products (-10.28 percent) and sugar and confectionery (-7.64 percent) but rose slightly for fruits (0.35 percent).
 
Among non-food products, prices increased for pan, tobacco and intoxicants (6.13 percent); clothing and footwear (3.55 percent); housing (6.55 percent); fuel and light (8.55 percent); and miscellaneous (6.73 percent).
 
The corresponding provisional inflation rates for rural and urban areas were 2.82 percent and 3.97 percent, compared with September's figures of 3.27 percent and 4.31 percent respectively.
 
On a monthly basis, consumer prices rose 0.29 percent.




Monday October 15 2018
India Wholesale Inflation Rises More than Expected
Office of the Economic Adviser l Rida | rida@tradingeconomics.com

Wholesale prices in India rose by 5.13 percent year-on-year in September of 2018, after a 4.53 percent gain in the prior month and above market estimates of 4.9 percent. Cost of manufacturing products and fuel continued to rise while prices of food fell much less.

In September, cost of manufactured products increased 4.22 percent, after a 4.43 percent rise in August; while cost of fuel and power  went up 16.65 percent, compared to a 17.73 percent rise in a month earlier. Meantime, cost of primary articles rose 2.97 percent, following a 0.15 percent fall in a month earlier, as cost of food dropped much less (-0.21 percent vs -4.04 percent in August), namely onion (-25.5 percent); vegetables (-3.83 percent) and fruits (-7.35 percent). 

On a monthly basis, wholesale prices rose 0.7 percent, compared to a 0.3 percent gain in August.


Friday October 12 2018
India Inflation Rate Rises Less than Forecasts
Joana Taborda | joana.taborda@tradingeconomics.com

Annual consumer inflation in India edged up to 3.77 percent in September of 2018 from 3.69 percent in August, but below market expectations of 4 percent. Food inflation increased only slightly, in line with central bank expectations. Earlier in the week, the Reserve Bank of India cut its inflation forecasts to 4 percent from 4.6 percent in Q2:2018-19 (July-September 2018), mentioning low food inflation.

Food and beverages inflation went up to 1.08 percent from 0.85 percent in August and the food index alone rose 0.51 percent, slightly higher than 0.29 percent in August. Prices rose faster for prepared meals, snacks, sweets etc. (4.41 percent compared to 4.16 percent); and non-alcoholic beverages (2.1 percent compared to 1.86 percent). On the other hand, inflation slowed for fruits (1.12 percent compared to 3.57 percent in August); milk and products (2.58 percent compared to 2.66 percent); eggs (3.76 percent compared to 6.96 percent); meat and fish (2.32 percent compared to 3.21 percent); oils and fats (3.21 percent compared to 3.47 percent); and was flat for spices (2.88 percent, the same as in August). Also, prices fell for vegetables (-4.15 percent compared to -7 percent); pulses and products (-8.58 percent compared to -7.76 percent); and sugar and confectionery (--6.42 percent compared to -5.81 percent).   
Among non-food products, prices rose at a faster pace for pan, tobacco and intoxicants (5.57 percent compared to 5.34 percent); and miscellaneous (5.65 percent compared to 5.52 percent) but were softer for housing (7.07 percent compared to 7.59 percent); and clothing and footwear (4.64 percent compared to 4.88 percent). Inflation was unchanged for fuel and light (8.47 percent, the same as in August).
The corresponding provisional inflation rates for rural and urban areas were 3.34 percent and 4.31 percent, compared with August's figures of 3.41 percent and 3.99 percent respectively.
On a monthly basis, consumer prices fell 0.07 percent in August, after a 0.43 percent gain in August.


Friday October 05 2018
India Leaves Rates Unchanged
RBI | Joana Taborda | joana.taborda@tradingeconomics.com

The Reserve Bank of India unexpectedly left its key policy rate steady at 6.5 percent on October 5th 2018, following a 25bps hike in the previous meeting, surprising markets that expected a similar rise to support a falling currency and curb inflationary pressures from oil prices. Policymakers said the decision is consistent with a calibrated tightening that aims to achieve a 4 percent +/- 2 percent inflation target and support growth. The reverse repo rate was also left at 6.25 percent and the marginal standing facility rate and the Bank Rate at 6.75 percent each.

The central bank cut its inflation forecasts, mentioning low food inflation: to 4 percent from 4.6 percent in Q2:2018-19 (July-September 2018); to 3.9 percent-4.5 percent from 4.8 percent in H2 (October 2018-March 2019); and to 4.8 percent from 5 percent in Q1:2019-2020 (April-June 2019).

Growth projections were also revised slightly lower: to 7.4 percent from 7.5 percent in Q2:2018-2019 (July-September 2018); to 7.1 percent-7.3 percent from 7.3 percent-7.4 percent in H2 (October 2018-March 2019); and to 7.4 percent from 7.5 percent in Q1:2019-2020 (April-June 2019). 

The reverse repo rate was also left at 6.25 percent and the marginal standing facility rate and the Bank Rate at 6.75 percent each.

Excerpts from the RBI Press Release:

Going forward, the inflation outlook is expected to be influenced by several factors. First, food inflation has remained unusually benign, which imparts a downward bias to its trajectory in the second half of the year. Inflation in key food items such as pulses, edible oils, sugar, fruits and vegetables remains exceptionally soft at this juncture. The risk to food inflation from spatially and temporally uneven rainfall is also mitigated, as confirmed by the first advance estimates that have placed production of major kharif crops for 2018-19 higher than last year’s record. An estimate of the impact of an increase in minimum support prices (MSPs) announced in July has been factored in the baseline projections. Secondly, the price of the Indian basket of crude oil has increased sharply, by US$ 13 a barrel, since the last resolution. Thirdly, international financial markets remained volatile with EME currencies depreciating significantly. Finally, the HRA effect came off its peak in June and is dissipating gradually on expected lines. Taking all these factors into consideration, inflation is projected at 4.0 per cent in Q2:2018-19, 3.9-4.5 per cent in H2 and 4.8 per cent in Q1:2019-20, with risks somewhat to the upside. Excluding the HRA impact, CPI inflation is projected at 3.7 per cent in Q2:2018-19, 3.8 - 4.5 per cent in H2 and 4.8 per cent in Q1:2019-20.

Turning to the growth outlook, the GDP print of Q1:2018-19 was significantly higher than that projected in the August resolution. Private consumption has remained robust and is likely to be sustained even as the recent rise in oil prices may have a bearing on disposable incomes. Improving capacity utilisation, larger FDI inflows and increased financial resources to the corporate sector augur well for investment activity. However, both global and domestic financial conditions have tightened, which may dampen investment activity. Rising crude oil prices and other input costs may also drag down investment activity by denting profit margins of corporates. This adverse impact will be alleviated to the extent corporates are able to pass on increases in their input costs. Uncertainty surrounds the outlook for exports. Tailwinds from the recent depreciation of the rupee could be muted by the slowing down of global trade and the escalating tariff war. Based on an overall assessment, GDP growth projection for 2018-19 is retained at 7.4 per cent as in the August resolution (7.4 per cent in Q2 and 7.1-7.3 per cent in H2), with risks broadly balanced; the path in the August resolution was 7.5 per cent in Q2:2018-19 and 7.3-7.4 per cent in H2. GDP growth for Q1:2019-20 is now projected marginally lower at 7.4 per cent as against 7.5 per cent in the August resolution, mainly due to the strong base effect.




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.