Monday April 16 2018
India Wholesale Inflation at 8-Month Low of 2.47%
Office of the Economic Adviser l Rida Husna | rida@tradingeconomics.com

Wholesale prices in India rose by 2.47 percent year-on-year in March of 2018, after a 2.48 percent gain in the prior month and below market estimates of 2.58 percent. It was the lowest wholesale inflation since July last year, as cost of food fell markedly while manufactured products inflation was little-changed.

In March, cost of primary articles increased at a slower 0.24 percent (from 0.79 percent in February), as cost of food fell (-0.29 percent from 0.88 percent in a month earlier), namely vegetables (-2.7 percent, compared to 15.26 percent). Meantime, cost of manufactured products rose 3.03 percent (from 3.04 percent in February). Cost of fuel and power went up by 4.7 percent, following a 3.81 percent rise in a month earlier. 

On a monthly basis, wholesale prices increased by 0.2 percent, compared to a flat reading in February. 




Thursday April 12 2018
India Inflation Rate at 5-Month Low of 4.28%
Joana Taborda | joana.taborda@tradingeconomics.com

Indian consumer prices rose 4.28 percent year-on-year in March of 2018, following a 4.44 percent increase in February and compared with market expectations of 4.2 percent. It is the lowest inflation rate in five months amid a slowdown in food cost.

Cost went up at a slower pace for food and beverages (3.01 percent from 3.38 percent in February). The food index alone rose 2.81 percent, below 3.26 percent in the previous month. Inflation eased for vegetables (11.7 percent from 17.57 percent) but went up for fruits (5.78 percent from 4.8 percent) and prices of pulses fell slightly less (-13.41 percent from -17.35 percent). Inflation was also lower for fuel and light (5.73 percent from 6.8 percent) and clothing and footwear (4.91 percent from 5 percent) but was slightly higher for housing (8.31 percent from 8.28 percent).

The corresponding provisional inflation rates for rural and urban areas are 4.44 percent and 4.12 percent (4.45 percent and 4.52 percent respectively in February).




Thursday April 05 2018
India Leaves Monetary Policy Unchanged
RBI | Joana Taborda | joana.taborda@tradingeconomics.com

The Reserve Bank of India left its key policy rate steady at 6 percent for the fourth meeting on April 5th 2018, matching market expectations. Policymakers said once again the decision is consistent with the neutral stance of monetary policy aiming to achieve the medium-term inflation target of 4 percent +/- 2 percent, while supporting growth. The central bank lowered inflation forecasts to 4.5 percent for Q4 of the current fiscal year (January to March 2018) from 5.1 percent. GDP growth for 2018-19 is seen higher at 7.4 percent from 6.6 percent in 2017-2018.

Excerpts from the RBI Press Release:

The 6th bi-monthly resolution of 2017-18 in February projected CPI inflation at 5.1 per cent in Q4:2017-18; and in the range of 5.1-5.6 per cent in H1:2018-19 and 4.5-4.6 per cent in H2, including the HRA impact, with risks tilted to the upside. Actual inflation outcomes in January-February averaged 4.8 per cent, largely reflecting the sharp decline in vegetable prices and significant moderation in fuel group inflation. The available information suggests that vegetable prices continued to moderate in March as well. Accordingly, inflation in Q4:2017-18 is now projected at 4.5 percent.

Projected CPI inflation for 2018-19 is revised to 4.7-5.1 per cent in H1:2018-19 and 4.4 per cent in H2, including the HRA (house rent allowance) impact for central government employees, with risks tilted to the upside. Excluding the impact of HRA revisions, CPI inflation is projected at 4.4-4.7 per cent in H1:2018-19 and 4.4 per cent in H2.

Turning to the growth outlook, several factors are expected to accelerate the pace of economic activity in 2018-19. First, there are now clearer signs of revival in investment activity as reflected in the sustained expansion in capital goods production and still rising imports, albeit at a slower pace than in January. Second, global demand has been improving, which should encourage exports and boost fresh investment. On the whole, GDP growth is projected to strengthen from 6.6 per cent in 2017-18 to 7.4 per cent in 2018-19 – in the range of 7.3-7.4 per cent in H1 and 7.3-7.6 per cent in H2 – with risks evenly balanced.

The reverse repo rate was also left on hold at 5.75 percent and the marginal standing facility rate and the Bank Rate at 6.25 percent.




Wednesday March 14 2018
India Wholesale Inflation at 7-Month Low of 2.48%
Office of the Economic Adviser l Rida Husna | rida@tradingeconomics.com

Wholesale prices in India rose by 2.48 percent year-on-year in February of 2018, after a 2.84 percent increase in the prior month while markets estimated a 2.5 percent gain. It was the lowest wholesale inflation since July 2017, as cost of food and fuel rose at softer paces.

In February, cost of primary articles increased at a slower 0.79 percent (from 2.37 percent in January), mainly due to a 0.88 percent rise in cost of food (from 3.0 percent in a month earlier), namely vegetables (15.26 percent, compared to 40.77 percent). Also, cost of fuel and power went up by 3.81 percent, easing from a 4.08 percent rise in a month earlier. Meantime, cost of manufactured products rose 3.04 percent, following a 2.78 percent in January.

On a monthly basis, wholesale prices were unchanged, after a 0.1 percent rise in January. 


Monday March 12 2018
India Inflation Rate at 4-Month Low
Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in India increased 4.44 percent year-on-year in February of 2018, below 5.07 percent in January and market expectations of 4.8 percent. It is the lowest inflation rate in four months but above the 4 percent medium-term target of the central bank.

Cost went up at a slower pace for food and beverages (3.38 percent from 4.58 percent in January). The food index alone rose 3.26 percent, below 4.7 percent in the previous month. Inflation eased for vegetables (17.57 percent from 26.97 percent) and fruits (4.8 percent from 6.24 percent) while prices of pulses fell slightly less (-17.35 percent from -20.19 percent). Inflation was also lower for fuel and light (6.8 percent from 7.73 percent) and housing (8.28 percent from 8.33 percent).

On the other hand, prices went up slightly more for clothing and footwear (5 percent from 4.94 percent).

The corresponding provisional inflation rates for rural and urban areas are 4.37 percent and 4.52 percent (5.21 percent and 4.93 percent respectively in January).


Wednesday February 28 2018
India GDP Growth Beats Forecasts in Q4
Joana Taborda | joana.taborda@tradingeconomics.com

The Indian economy expanded 7.2 percent year-on-year in the last three months of 2017, well above an upwardly revised 6.5 percent advance in the previous period and beating market expectations of 6.9 percent. It is the strongest growth rate since the third quarter of 2016, boosted by a jump in investment and public spending.

Gross fixed capital formation surged 12 percent compared to a 6.9 percent rise in the previous period; stocks went up 6.9 percent, above 5.8 percent in Q3; and government spending expanded 6 percent, also higher than 2.9 percent in Q3. On the other hand, a slowdown was seen for private consumption (5.6 percent compared to 6.6 percent in Q3). Exports also rose less (2.5 percent compared to 6.5 percent) while imports growth accelerated (8.7 percent compared to 5.4 percent). 

Gross Value Added, that is, GDP excluding taxes expanded 6.7 percent, higher than 6.2 percent in Q3. Faster growth was recorded for agriculture, forestry and fishing (4.1 percent compared to 2.7 percent in Q3); manufacturing (8.1 percent compared to 6.9 percent); construction (6.8 percent compared to 2.8 percent); finance, real estate and professional services (6.7 percent compared to 6.4 percent); and public administration and defense (7.2 percent compared to 5.6 percent). On the other hand, slowdowns were recorded for utilities (6.1 percent compared to 7.7 percent); and trade, hotels, transport, communication and services related to broadcasting (9 percent compared to 9.3 percent); and mining and quarrying fell 0.1 percent after a 7.1 percent jump in Q3. 

Considering the 2016/2017 fiscal year (April 2016 to March 2017), the economy advanced 7.1 percent. For the 2017/2018 fiscal year, the government expectes growth at 6.6 percent, higher than an earlier estimate of 6.5 percent.




Thursday February 15 2018
India Wholesale Inflation at 6-Month Low of 2.84%
Rida | rida@tradingeconomics.com

Wholesale prices in India rose by 2.84 percent year-on-year in January of 2018, after a 3.58 percent increase in the prior month and below market estimates of a 3.25 percent gain. It was the lowest wholesale inflation since July 2017, mainly due to softer rises in cost of food and fuel.

In January, cost of primary articles increased at a slower 2.37 percent (from 3.86 percent in December), mainly due to a 3.0 percent rise in cost of food (from 4.72 percent in a month earlier), namely vegetables (40.77 percent, compared to 56.46 percent). Meantime, cost of manufactured products rose 2.78 percent, following a 2.61 percent in the prior month, while cost of fuel and power went up 4.08 percet (after a 9.16 percent). 

On a monthly basis, wholesale prices increased by 0.1 percent, after a 0.5 percent fall in December 2017. 


Monday February 12 2018
India Inflation Rate Slows More than Anticipated
Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in India increased 5.07 percent year-on-year in January of 2018, below a 17 month high of 5.21 percent in December and market expectations of 5.14 percent. Still, the inflation remained above 4.8 percent for the third month, the level not seen since July of 2016 and above 4 percent medium-term target of the Reserve Bank of India.

Cost went up at a slower pace for food and beverages (4.58 percent from 4.85 percent in December). The food index alone rose 4.7 percent, below 4.96 percent in the previous month. Inflation eased for vegetables (26.97 percent from 29.13 percent) and fruits (6.24 percent from 6.63 percent) while prices of pulses fell slightly less (-20.19 percent from -23.47 percent). Inflation was also slightly lower for fuel and light (7.73 percent from 7.9 percent).

On the other hand, prices went up faster for housing (8.33 percent from 8.23 percent) and clothing and footwear (4.94 percent from 4.8 percent).

The corresponding provisional inflation rates for rural and urban areas are 5.21 percent and 4.93 percent (5.27 percent and 5.09 percent respectively in December).


Wednesday February 07 2018
India Keeps Rates Unchanged
RBI | Joana Taborda | joana.taborda@tradingeconomics.com

The Reserve Bank of India kept its benchmark interest rate steady at 6 percent on February 7th 2018, matching market expectations. Policymakers reinforced the decision is consistent with a neutral stance of monetary policy aiming to reach the medium-term inflation target of 4 percent +/- 2 percent, while supporting growth. The central bank raised inflation forecasts to 5.1 percent for Q4 of the current fiscal year (January to March 2018) from 4.3-4.7 percent and GVA growth expectations were lowered to 6.6 percent for 2017-2018 from 6.7 percent. The reverse repo rate was also left on hold at 5.75 percent and the marginal standing facility rate and the Bank Rate at 6.25 percent.

Excerpts from the RBI Press Release:

The December bi-monthly resolution projected inflation in the range of 4.3-4.7 per cent in the second half of 2017-18, including the impact of increase in HRA. In terms of actual outcomes, headline inflation averaged 4.6 per cent in Q3, driven primarily by an unusual pick-up in food prices in November. Though prices eased in December, the winter seasonal food price moderation was less than usual. Domestic pump prices of petrol and diesel rose sharply in January, reflecting lagged pass-through of the past increases in international crude oil prices. Considering these factors, inflation is now estimated at 5.1 per cent in Q4, including the HRA impact.

The inflation outlook beyond the current year is likely to be shaped by several factors. First, international crude oil prices have firmed up sharply since August 2017, driven by both demand and supply side factors. Second, non-oil industrial raw material prices have also witnessed a global uptick. Firms polled in the Reserve Bank’s IOS expect input prices to harden in Q4. In a scenario of improving economic activity, rising input costs are likely to be passed on to consumers. Third, the inflation outlook will depend on the monsoon, which is assumed to be normal. Taking these factors into consideration, CPI inflation for 2018-19 is estimated in the range of 5.1-5.6 per cent in H1, including diminishing statistical HRA impact of central government employees, and 4.5-4.6 per cent in H2, with risks tilted to the upside. The projected moderation in inflation in the second half is on account of strong favourable base effects, including unwinding of the 7th CPC’s HRA impact, and a softer food inflation forecast, given the assumption of normal monsoon and effective supply management by the Government. 

Turning to the growth outlook, GVA growth for 2017-18 is projected at 6.6 per cent. Beyond the current year, the growth outlook will be influenced by several factors. First, GST implementation is stabilising, which augurs well for economic activity. Second, there are early signs of revival in investment activity as reflected in improving credit offtake, large resource mobilisation from the primary capital market, and improving capital goods production and imports. Third, the process of recapitalisation of public sector banks has got underway. Large distressed borrowers are being referenced for resolution under the Insolvency and Bankruptcy Code (IBC). This should improve credit flows further and create demand for fresh investment. Fourth, although export growth is expected to improve further on account of improving global demand, elevated commodity prices, especially of oil, may act as a drag on aggregate demand. Taking into consideration the above factors, GVA growth for 2018-19 is projected at 7.2 per cent overall – in the range of 7.3-7.4 per cent in H1 and 7.1-7.2 per cent in H2 – with risks evenly balanced. 


Monday January 15 2018
India WPI Rises Less than Expected in December
Office of the Economic Adviser l Rida Husna | rida@tradingeconomics.com

Wholesale prices in India rose by 3.58 percent year-on-year in December of 2017, following a 3.93 percent increase in the prior month. The figure came below market estimates of a 4 percent gain, mainly due to a slowdown in cost of food.

In December, cost of primary articles increased at a slower 3.86 percent (from 5.28 percent in November), mainly due to a 4.72 percent rise in cost of food (from 6.06 percent in a month earlier), namely vegetables (56.46 percent, compared to 59.80 percent). Meantime, cost of manufactured products rose 2.61 percent, the same as in the prior month, while cost of fuel and power went up 9.16 percet (after a 8.82 percent in the previous month). 

On a monthly basis, wholesale prices fell by 0.5 percent, after a 0.7 percent rise in a month earlier.