India Inflation June 2016


India: Price pressures elevated in June

July 14, 2016

In June, consumer prices increased 1.17% over the previous month, which was above May’s 1.02% rise. The monthly result mainly reflected higher prices for food and beverages as well as pan, tobacco and intoxicants. Inflation rested at May’s 5.8% in June, the highest rate since August 2014. The result matched market analysts’ expectations. Inflation remains above the Central Bank’s target of 5.0% by March 2017, largely due to elevated food price pressures. However, a pick-up in monsoon rains in June and July should contribute to a stabilization in food price inflation going forward.

The wholesale price index (WPI) in June rose 1.45% over the previous month, which followed May’s 1.36% increase. June’s reading continued to reflect rising prices for primary articles as well as for fuel and power products. Wholesale price inflation jumped from May’s 0.8% to 1.6% in June, which marked the highest reading since February 2015. In addition, the trend pointed up and the annual average variation in wholesale prices rose from minus 2.0% in May to minus 1.7% in June.

FocusEconomics Consensus Forecast panelists expect consumer price inflation to average 5.1% in FY 2016, which is unchanged from last month’s forecast. In FY 2017, the panel expects consumer price inflation to average 5.0%. Panelists expect wholesale price inflation of 1.8% in FY 2016, which is up 0.1 percentage points from last month’s forecast. In FY 2017, the panel expects wholesale price inflation to average 3.3%.

Author: Angela Bouzanis, Lead Economist

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India Inflation Chart

India Inflation June 2016 0

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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