India Inflation September 2020

India

India: Inflation hits highest level since January in September

October 14, 2020

Consumer prices rose 1.16% from the previous month in September, accelerating from the 0.52% rise seen in August. The increase was largely driven by rising prices for food and beverages. In addition, price pressures for fuel and light rose notably in September.

Inflation increased to 7.3% in September, which was up from August’s 6.7%. September's result represented the highest inflation rate since January. Annual average inflation rose to 6.5% in September (August: 6.2%).

Commenting on India’s inflation outlook with regards to monetary policy, analysts at Nomura noted:

“Given our view that the durability of the growth slowdown far outweighs the durability of the inflation surge, we believe more monetary policy easing is still in the pipeline, especially with fiscal space also limited. We expect a cumulative 50bp of repo rate cuts, with 25bp in each of Q4 2020 (December) and Q1 2021 (February).”

FocusEconomics Consensus Forecast panelists project consumer price inflation to average 5.1% in FY 2020, which ends in March 2021. The estimate is up 0.1 percentage points from last month’s forecast. In FY 2021, the panel projects consumer price inflation to average 4.3%. Meanwhile, our panel sees wholesale inflation averaging 1.0% in FY 2020, which is unchanged from last month’s report, and 3.3% in FY 2021.


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