India: Inflation decelerates in July
August 14, 2018
In July, consumer prices rose 0.94% from the previous month—more than the revised 0.51% rise recorded in June (previously reported: +0.58% month-on-month) and the biggest increase since November 2017. Higher prices for food and beverages drove the overall price rise in July. Moreover, prices for fuel and light, housing, and clothing and footwear also rose strongly in the month. Meanwhile, pan, tobacco and intoxicants prices fell in July.
Inflation decelerated for the first time in four months in July, coming in at 4.2%, down from June’s revised 4.9% (previously reported: 5.0%). Weaker inflation was due to a slower increase in prices for food and beverages. Meanwhile, other price categories registered strong increases in July, including pan, tobacco and intoxicants; clothing and footwear; housing; and fuel and light. Core inflation, which excludes food and energy products, slowed to 6.1% in July from 6.6% in June.
The wholesale price index (WPI) rose 0.4% from the prior month in July, less than the revised 0.8% increase in June (previously reported: +1.10% mom). Wholesale price inflation decelerated in July and came in at 5.1%, down from 5.8% in June. This was driven by a weaker price increase for primary articles such as foods and minerals. Higher prices for energy and manufactured products, however, limited the deceleration. Meanwhile, annual average wholesale inflation accelerated to 3.8% in July from 3.5% in June.
India Inflation Forecast
FocusEconomics Consensus Forecast panelists expect consumer price inflation to average 4.9% in FY 2018, which is unchanged 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 3.8% for FY 2018, down 0.2 percentage points from last month’s report. In FY 2019, our panel foresees wholesale inflation averaging 3.4%.
Author: Edward Gardner, Economist