India Inflation March 2018


India: Inflation picks up in April

May 14, 2018

In April, consumer prices rose 0.44% from the previous month, accelerating from the 0.07% rise recorded in March and representing the strongest increase in five months. Prices rose nearly across the board in April, with the highest increases recorded in the prices of fruit, education and personal care.

Inflation accelerated for the first time in four months in April, to 4.6% from March’s 4.3%. The headline figure overshot market expectations of 4.4%. Despite the uptick, fuel inflation moderated to 5.2% in April from 5.7% in March. Food inflation was 2.8% in April, matching March’s print. Food inflation excluding vegetables and pulses, however, ticked up to 3.2% (March: 2.6%).

Core inflation, which excludes food and energy products, picked up notably to 6.1% in April from 5.4% in March, outpacing market expectations. Core categories that recorded higher inflation included housing, education, household goods, and clothing and footwear. Shelter inflation remained above eight percent in April, impacted by the housing rent allowance revisions. Core price momentum will likely see headline consumer price inflation trending higher in the coming months. Moreover, higher oil prices and an expected increase in minimum support prices for agricultural produce are expected to fan headline inflation in the near-term.

The wholesale price index (WPI) rose 0.69% from the prior month in April, which contrasted the revised 0.09% decline recorded in March (previously reported: +0.17% month-on-month) and was the largest increase in five months. Wholesale inflation, meanwhile, picked up in April and came in at 3.2%, up from 2.5% in March. The acceleration was driven by higher fuel and energy prices from the previous month. Inflation in manufactured products also slightly accelerated in April, to 3.1% (March: +3.0%). Annual average wholesale inflation moderated from 2.9% in March to 2.8% in April, an eight-month low.

India Inflation Forecast

FocusEconomics Consensus Forecast panelists expect consumer price inflation to average 4.9% in FY 2018, which is up 0.1 percentage points from last month’s forecast. In FY 2019, the panel expects consumer price inflation to average 4.6%. Meanwhile, our panel projects wholesale inflation of 3.9% for FY 2018, down 0.3 percentage points from last month’s report. In FY 2019, our panel foresees wholesale inflation averaging 3.4%.


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India Inflation Chart

India Inflation March 2018

Note: Annual and monthly variation of wholesale price index (WPI) and annual variation of consumer price index (CPI) in %.
Source: Ministry of Commerce and Industry and FocusEconomics calculations.

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