India: Inflation increases in December
Inflation came in at 5.7% in December, which was up from November’s 5.6% but below market expectations. Looking at the details of the release, prices for food and beverages rose at a quicker rate in December, although prices for fuel and light dropped at a faster pace.
The trend was unchanged, with annual average inflation coming in at November’s 5.7% in December.
Finally, consumer prices dropped 0.32% over the previous month in December, swinging from November’s 0.54% increase. December’s result marked the weakest reading since September.
Analysts at Nomura commented on the implications of the print for monetary policy:
“The macro environment of resilient growth and anchored core inflation amid food inflation risks is setting the stage for an extended pause by the RBI, in our view […]. We expect the RBI to deliver 100bp of rate cuts cumulatively from August, with risks skewed towards June.”