India Inflation


Inflation climbs to six-month high

In August, the wholesale price index (WPI), India's preferred inflation measure, rose 1.20% over the previous month. The reading follows the revised 1.27% increase recorded in July (previously reported: 1.56%) and reflects higher prices for primary products, especially for food, which jumped amid surging prices for onions. Onions are regarded as an essential part of the Indian diet and rising prices of the vegetable mainly reflect excessive monsoon rains, and the country's poor infrastructure for storage and transport.

Wholesale prices jumped 6.1% in August over the same month last year (July: 5.8% year-on-year), which represents the highest level in six months. The annual reading exceeded market expectations, which had wholesale prices increasing 5.7%. Despite the annual increase, annual average WPI inflation declined from 6.5% in July to 6.4% in August.

Furthermore, the consumer price index increased 1.13% over the previous month in August, below the 1.29% rise observed in July. As a result of the milder monthly increase, annual inflation inched down from 9.6% July to 9.5% in August.

FocusEconomics Consensus Forecast panelists expect wholesale price inflation to average 5.4% in fiscal year 2013/2014, which is down 0.3 percentage points from last month's forecast. In fiscal year 2014/2015, the panel expects wholesale price inflation to average 5.7%.

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India Inflation Chart

India Inflation August 2013

Note: Monthly and annual variation of wholesale price index in %.
Source: Reserve Bank of India (RBI) and FocusEconomics calculations.

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