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.


Wednesday June 06 2018
India Hikes Key Repo Rate to 6.25%
Joana Taborda | joana.taborda@tradingeconomics.com

The Reserve Bank of India raised its benchmark policy repo rate by 25bps to 6.25 percent on June 6th 2018 while markets expected no changes. It is the first hike in borrowing costs since January of 2014, mentioning upside risks to inflation that include higher oil prices and uncertainty in global financial markets. Policymakers said 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 percent from 5.75 percent and the marginal standing facility rate and the Bank Rate to 6.5 percent from 6.25 percent.

Excerpts from the RBI Press Release:

Actual inflation outcomes since the April policy have evolved broadly on the lines of the projected trajectory. However, there has been an important compositional shift. While the summer momentum in vegetable prices was weaker than the usual pattern, there was an abruptacceleration in CPI inflation excluding food and fuel.

Since the MPC’s meeting in early April, the price of Indian basket of crude surged from US$ 66 a barrel to US$ 74. This, along with an increase in other global commodity prices and recent global financial market developments, has resulted in a firming up of input cost pressures, as also confirmed in the Reserve Bank’s IOS for manufacturing firms in Q2:2018-19. The resulting pick-up in the momentum of inflation excluding food, fuel and HRA has imparted persistence into higher CPI projections for 2018-19. On the other hand, food inflation has remained muted over the past few months and the usual seasonal pickup delayed, softening the projections in the short run. Taking these effects into account, projected CPI inflation for 2018-19 is revised to 4.8-4.9 per cent in H1 and 4.7 per cent in H2, including the HRA impact for central government employees, with risks tilted to the upside. Excluding the impact of HRA revisions, CPI inflation is projected at 4.6 percent in H1 and 4.7 per cent in H2.

On the basis of an overall assessment, GDP growth for 2018-19 is retained at 7.4 per cent as in the April policy. GDP growth is projected in the range of 7.5-7.6 per cent in H1 and 7.3-7.4 per cent in H2, with risks evenly balanced.

A major upside risk to the baseline inflation path in the April resolution has materialised, viz., 12 per cent increase in the price of Indian crude basket, which was sharper, earlier than expected and seems to be durable. Crude oil prices have been volatile recently and this imparts considerable uncertainty to the inflation outlook – both on the upside and the downside. Several other risks remain. First, global financial market developments have emerged as another important source of uncertainty. Second, the significant rise in households’ inflation expectations as gathered in the May 2018 round of the Reserve Bank’s survey could feed into wages and input costs in the coming months. However, the pass-through to output prices remains muted presently. Third, the staggered impact of HRA revisions by various state governments may push headline inflation up. While the statistical impact of HRA revisions will be looked through, there is a need to watch out for any second round impact on inflation. Fourth, the impact of the revision in the MSP formula for kharif crops is not possible to assess at this stage in the absence of adequate details. Fifth, as forecast by the IMD, if the monsoon is normal and well-distributed temporally and spatially, it may help keep food inflation benign. 




Thursday May 31 2018
India GDP Growth Beats Forecasts at 7.7% in Q1
Joana Taborda | joana.taborda@tradingeconomics.com

The Indian economy expanded 7.7 percent year-on-year in the first three months of 2018, higher than a downwardly revised 7 percent advance in the previous quarter and beating market forecasts of a 7.3 percent growth. It is the highest growth rate since the second quarter of 2016, boosted by a jump in investment. On the production side, manufacturing, agriculture and construction were the main contributors to growth.

Government spending recorded the highest growth rate (16.8 percent compared to 6.8 percent in Q4), followed by gross fixed capital formation (14.4 percent compared to 9.1 percent), stocks (7.8 percent compared to 7.2 percent) and household consumption (6.7 percent compared to 5.9 percent). On the other hand, exports slowed (3.6 percent compared to 6.2 percent) and imports rose faster (10.9 percent compared to 10.5 percent). Household spending accounted for 54.6 percent of the GDP; gross fixed capital formation for 32.2 percent; public expenditure for 9.5 percent; and changes in stocks for 0.7 percent. Exports accounted for 19.5 percent while imports subtracted 20.9 percent. 

Gross Value Added, that is, GDP excluding taxes expanded 7.6 percent, higher than 6.6 percent in Q4. Faster growth was recorded for manufacturing (9.1 percent compared to 8.5 percent in Q4); agriculture, forestry and fishing (4.5 percent compared to 3.1 percent in Q4); public administration and defense (13.3 percent compared to 7.7 percent); construction (11.5 percent compared to 6.6 percent); mining and quarrying (2.7 percent compared to 1.4 percent); and utilities (7.7 percent compared to 6.1 percent). On the other hand, slowdowns were seen in trade, hotels, transport, communication and services related to broadcasting (6.8 percent compared to 8.5 percent); and finance, real estate and professional services (5 percent compared to 6.9 percent).

Considering the 2017/2018 financial year (April 2017 to March 2018), the economy expanded 6.7 percent, below 7.1 percent a year earlier, but in line with government estimates of 6.75 percent.




Monday May 14 2018
India April Inflation Rate Above Expectations
Joana Ferreira | joana.ferreira@tradingeconomics.com

India's annual inflation rate rose to a three-month high of 4.58 percent in April 2018 from 4.28 percent in the previous month, and above market expectations of 4.42 percent.

Prices rose at a faster pace for: housing (8.50 percent vs 8.31 percent in March); clothing and footwear (5.11 percent vs 4.91 percent); pan, tobacco and intoxicants (7.91 percent vs 7.79 percent); and miscellaneous (4.96 percent vs 4.16 percent).

Meanwhile, food and beverages inflation was nearly flat at 3.00 percent (vs 3.01 percent in March), with the food index alone rising 2.80 percent (vs 2.81 percent in March). Upward pressure came from: fruits (9.65 percent vs 5.78 percent); vegetables (7.29 percent vs 11.70 percent); eggs (6.26 percent vs 7.47 percent); prepared meals, snacks, sweets etc. (4.85 percent vs 4.44 percent); meat and fish (3.59 percent vs 3.17 percent); milk and products (3.21 percent vs 3.52 percent); oils and fats (2.11 percent vs 1.85 percent); non-alcoholic beverages (1.73 percent vs 1.42 percent); and spices (1.25 percent vs -0.07 percent). On the other hand, prices fell for both pulses and products (-12.35 percent vs -13.41 percent) and sugar and confectionery (-4.05 percent vs -1.61 percent). In addition, fuel and light inflation softened to 5.24 percent in April from 5.73 percent in the previous month.

The corresponding provisional inflation rates for rural and urban areas were 4.67 percent and 4.42 percent, compared with March's figures of 4.44 percent and 4.12 percent respectively.

On a monthly basis, consumer prices increased 0.44 percent in April, after a 0.07 percent gain in March.


Monday May 14 2018
India Wholesale Inflation at 4-Month High of 3.18%
Office of the Economic Adviser l Rida | rida@tradingeconomics.com

Wholesale prices in India rose by 3.18 percent year-on-year in April of 2018, after a 2.47 percent gain in the prior month and above market estimates of 2.86 percent. It was the highest wholesale inflation since December 2017, as cost increased at a faster pace for manufactured products and fuel, while prices of food rebounded.

In April, cost of primary articles increased at a faster 1.41 percent (from 0.24 percent in March), as cost of food rebounded (0.87 percent from -0.29 percent in a month earlier), namely potato (67.94 percent). Also, cost increased more for manufactured products (3.11 percent from 3.03 percent), and fuel and power (7.85 percent from 4.7 percent). 

On a monthly basis, wholesale prices increased by 0.7 percent, compared to a 0.2 percent rise in March.


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).