India: Inflation reaches a five-month high in June
July 16, 2018
In June, consumer prices rose 0.58% from the previous month—more than the 0.51% rise recorded in May and representing the largest increase since November 2017. Higher prices for food and beverages drove the increase in June. Moreover, prices for pan, tobacco and intoxicants; clothing and footwear; and fuel and light also rose. On the other hand, prices fell for housing.
Inflation accelerated for the third consecutive month in June, hitting 5.0%, a five-month high. This was up from May’s 4.9%. Inflation was supported by higher prices across all major categories of goods and services in June compared to the same month in 2017. It was particularly driven by higher prices for pan, tobacco and intoxicants; housing; and fuel and light. Core inflation, which excludes food and energy products, picked up to 6.6% in June from 6.3% in May. This was partly due to a low base effect.
The wholesale price index (WPI) rose 1.10% from the prior month in June, more than the 0.94% increase in May. Wholesale inflation, meanwhile, accelerated in June and came in at 5.8%, up from 4.4% in May. The acceleration was driven by high fuel and energy prices and resulted in the highest inflation rate since December 2013. Annual average wholesale inflation accelerated to 3.5% in June from 3.1% in May.
India Inflation Forecast
FocusEconomics Consensus Forecast panelists expect consumer price inflation to average 4.9% in FY 2018, which is unchanged 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 3.8% for FY 2018, down 0.2 percentage points from last month’s report. In FY 2019, our panel foresees wholesale inflation averaging 3.4%.
Author: Edward Gardner, Economist