India Inflation October 2022


India: Inflation plunges to lowest level since July in October

November 14, 2022

Inflation came in at 6.8% in October, down from September’s 7.4%. October's result marked the lowest inflation rate since July., but marginally exceeded market expectations. Looking at the details of the release, prices for food and beverages grew at a slower pace in October. Prices for fuel and light rose at a more moderate rate. Meanwhile, clothing and footwear prices were steady.

The trend pointed up slightly, with annual average inflation coming in at 6.6% in October (September: 6.4%).

Finally, consumer prices rose 0.80% in October over the previous month, picking up from September's 0.57% rise. October's result marked the highest reading since May.

The October print reflected a decline in price pressures for food and energy, which was driven by recent downturns in global commodity prices. Prices were also contained due to government export controls, notably on wheat, which should serve to further depress inflation going forward. An upside risk is posed by sticky core inflation, which was roughly stable in October, according to several economists’ estimates. Bringing persistent core inflation down will be trickier, as it depends on the impact of Central Bank interest rate hikes on domestic demand.

ANZ’s Dhiraj Nim and Sanjay Mathur said:

“CPI inflation is evolving in line with the Reserve Bank of India’s projections. However, sticky core inflation is becoming a concern. Thankfully, imported inflation looks to be easing as the underlying prices of the imported CPI basket are coming down. The impact of the exchange rate however needs to be watched carefully.”

Nomura’s Sonal Varma and Aurodeep Nandi commented:

“Despite the upside surprise, we believe the inflation trajectory has inflected, and headline inflation should moderate from 7.0% in Q3 (Jul-Sep) to ~6.6% in Q4, 6.3% in Q1 2023 and further to ~5% levels in Q2 (owing to base effect). On average, we estimate headline inflation to moderate to 5.5% in 2023, from 6.8% in 2022 (FY23: 6.8%; FY24: 5.4%), due to energy base effects and lagged effects of policy tightening via weaker demand.”

Our panel projects inflation to average 6.7% in FY 2022, which is down 0.1 percentage points from last month’s estimate, and 5.1% in FY 2023.


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India Inflation Chart

India Inflation October 2022 0

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

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