India Inflation February 2019

India: Consumer price inflation accelerates in February but remains low

In February, consumer prices rose 0.22% compared to the previous month, which contrasts the revised 0.36% decrease in January (previously reported: -0.29% month-on-month). Propping up prices in February was more expensive housing, whereas most other price categories were little changed in the month.

Consumer price inflation accelerated to 2.6% in February, up from 2.0% in January and above market analyst expectations of 2.4%. However, this inflation rate is still towards the lower end of the Reserve Bank of India’s target range of 2.0% to 6.0%. Core inflation, which excludes food and energy products, rose to between 5.3% and 5.4% in February, up from between 5.2% and 5.3% in January. This latest uptick in inflation could partly heed off calls for the Reserve Bank of India to reduce rates again at its next monetary policy meeting on 2–4 April, after raising them on 7 February. However, recent data has shown that commercial banks have not reduced the interest rates charged to customers much since 7 February, prompting speculation the Reserve Bank could lean towards another cut in April to further stimulate economic growth.

Wholesale prices increased 0.3% month-on-month in February, contrasting the revised 0.4% fall in January (previously reported: -0.7% mom). Higher prices in February came on the back of more expensive fuel and power. On the other hand, food prices fell. Wholesale price inflation accelerated to 2.9% in February, up from 2.8% in January, and annual average wholesale price inflation ticked up to 4.3% from 4.2%.

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