India Inflation


Inflation eases in June

In June, the wholesale price index (WPI) - India's preferred measure of inflation - added 0.18% over last month. The figure was slightly below the 0.24% rise observed in May and also undershot market expectations, which had anticipated prices adding 0.40%. The monthly figure mainly reflected how an increase in prices for primary articles and manufactured products was partially offset by lower prices for fuel and power. As a result of the mild monthly rise, annual headline WPI inflation fell from 7.6% in May to 7.3% in June. Annual average wholesale price inflation followed suit, moderating from 8.6% in May to 8.4%. Despite the moderation in inflation figures, Reserve Bank of India Governor Duvvuri Subbarao recently stated that inflation is way above threshold, dampening expectations of a possible rate cut at the next monetary policy meeting scheduled for 31 July. Meanwhile, the consumer price index added 0.94% over the previous month in May - the latest month for which data are available - which was down from the 1.39% rise recorded in April. As a result, annual consumer inflation inched up from 10.3% in April to 10.4%.


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India Inflation Chart

India Inflation June 2012

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

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