India Inflation


Inflation drops to lowest level in three and half years

In May, the wholesale price index (WPI) - India's preferred inflation measure - added 0.06% over the previous month, which came in well below the 0.82% increase recorded in April. The subdued increase reflects higher prices for primarily products, particularly for food, which was partially offset by lower prices for fuel and electricity.

Annual headline inflation fell from 4.9% in April to 4.7%, which marks the lowest level observed since October 2009. In addition, the drop exceeded market expectations, which had WPI inflation remaining stable at 4.9%. Annual average WPI inflation declined from 7.1% in April to 6.9% in May, the lowest level since June 2010.

Meanwhile, also in May, the consumer price index jumped 0.86% over the previous month, which was above the 0.47% increase registered in April. Despite the monthly rise, annual inflation eased for the third month in a row, inching down from 9.4% in April to 9.3% in May, the lowest print in 14 months.

FocusEconomics Consensus Forecast panellists anticipate wholesale price inflation to average 6.5% in fiscal year 2013/14, which is down 0.1 percentage points from last month's forecast. In the fiscal 2014/15, the panel anticipates wholesale price inflation to average 6.2%.

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India Inflation Chart

India Inflation May 2013

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

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