India Inflation July 2016

India

India: Price pressures surge in July

August 15, 2016

In July, consumer prices increased 0.77% over the previous month, which was below June’s 1.17% rise. The monthly result mainly reflected rising prices for food and beverages. Inflation rose to a nearly two-year high of 6.1% in July, up from June’s 5.8%. As a result, inflation is above the Central Bank’s target of 4.0% plus or minus 2.0 percentage points 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 July rose 1.04% over the previous month, which followed June’s 1.45% increase. July’s reading reflected a strong increase in prices for primary articles, while manufactured products saw a more subdued rise in prices. Wholesale price inflation jumped from June’s 1.6% to 3.6% in July, which marked the highest reading since November 2014. In addition, the trend pointed up and the annual average variation in wholesale prices rose from minus 1.7% in June to minus 1.0% in July.

FocusEconomics Consensus Forecast panelists expect consumer price inflation to average 5.2% in FY 2016, which is unchanged from last month’s forecast. In FY 2017, the panel expects consumer price inflation to average 5.1%. Panelists expect wholesale price inflation of 2.1% 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, Senior Economist

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India Inflation July 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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