India: Consumer price inflation slows in December to an over one-year low

In December, consumer prices rose fell 0.43% in December from the previous month, contrasting the 0.07% rise logged in November. Cheaper food and beverages, housing, and fuel and light all weighed on overall price levels in December. On the other hand, prices rose for pan, tobacco and intoxicants; clothing and footwear; and miscellaneous products.

Consumer price inflation slowed to 2.2% in December from 2.3% in November, matching market analysts’ expectations. This represents the lowest inflation rate since June 2017. Core consumer price inflation, which excludes food and energy products, was unchanged at 5.7% in December. Annual average inflation slowed to 4.0% in December from 4.2% in November.

In December, wholesale prices fell 1.4% month-on-month, a larger decrease than November’s 0.2% fall. This latest outturn was due to a substantial drop in prices for fuel and light. Wholesale price inflation decelerated to 3.8% in December from 4.6% in November. Annual average wholesale inflation held steady at 4.3% in December.

India Inflation Forecast

FocusEconomics Consensus Forecast panelists expect consumer price inflation to average 4.3% in FY 2018, which is down 0.4 percentage points from last month’s forecast. In FY 2019, the panel expects consumer price inflation to average 4.7%. Meanwhile, our panel projects wholesale inflation of 4.5% for FY 2018, up 0.2 percentage points from last month’s report. In FY 2019, our panel foresees wholesale inflation averaging 4.9%.