India Inflation


India: Inflation moderates for second month in a row

May 16, 2011

In April, the wholesale price index (WPI) ? India's headline inflation measure ? added 1.35% over the previous month, which came in well above the revised 0.34% increase observed in March (previously reported: +1.37% month-on-month). According to the Ministry of Commerce, the WPI series were revised as there was a ?programming error?, which saw metal products not being correctly incorporated into the index. That said, the monthly WPI hike was mainly the result of higher food prices (+2.46% month-on-month), in particular for fruits, vegetable and coffee. Furthermore, rising prices for beverages and tobacco also contributed to the monthly price rise. Meanwhile, the slightly dated consumer price index for industrial workers (CPI-IW) tallied a flat reading in March over the previous month, contrasting the 1.60% monthly price drop observed in February. Nevertheless, annual CPI-IW inflation remained unchanged over the previous month at 8.8%. Despite the monthly hike, annual WPI inflation slowed from 9.0% in March to 8.7% in April which, nevertheless, overshot market expectations that had WPI inflation at 8.6%. As a result, annual average WPI inflation inched down from 9.3% in March to 9.1% in April, and is expected to continue moderating going forward.


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