India: Inflation falls for first time following six months of increase
January 15, 2014
The wholesale price index (WPI) - India's preferred inflation measure - decreased 1.27% over the previous month in December, which marked the sharpest fall since December 2008. The reading contrasted the 0.44% increase registered in November and primarily resulted from a significant decline in prices for food, particularly for fresh food.
Wholesale prices increased 6.2% over the same month of the previous year, which came in below the 7.5% rise observed in November, marking the first decline in inflation after six consecutives months of increase. The annual reading undershot the 6.9% increase the market had expected. As a result of the fall in the annual figure, annual average WPI inflation inched down from November's 6.4% to 6.3% in December.
In addition, the consumer price index decreased 1.00% over the previous month in December (November: +1.31% month-on-month), which is the fastest decrease that has been recorded since records began in January 2011. Annual inflation plunged from 11.2% in November to 9.9% in December.
FocusEconomics Consensus Forecast panelists expect wholesale price inflation to average 6.0% in fiscal year 2013/2014, which is unchanged from last month's forecast. In fiscal year 2014/2015, the panel expects wholesale price inflation to average 5.8%.
Author: Ricardo Aceves, Senior Economist