From 11% to 2.2%, Five charts explain vanishing India inflation

Four years ago Indian inflation was running at more than 11 percent. Now it’s melted to a record low 2.2 percent, below Mexico, Turkey and the U.K., as the central bank’s battle against price pressures gains traction.

The slide has prompted the Reserve Bank of India, led by Urjit Patel, to slashed its inflation forecasts and led one members of its six-person monetary policy committee to break ranks at its June 6 announcement, stoking market speculation the bank could next cut rates, perhaps as early as August. Read the rest of this entry »

Low inflation blues may taper off in the second half of FY18

Source: Business Standard, June 14, 2017

New Delhi: Retail price inflation, whose rate fell to the lowest level in May in accordance with the new series, has an upside risk in the second half of the financial year owing to a likely revision in house rent allowances for government employees and an expected rise in the fiscal deficit of the states that are giving a farm debt waiver.

It may touch 4-5.5 per cent in those six months.

The reduction of the consumer price index (CPI) rate to 2.18 per cent in May, close to the floor agreed upon by the government and RBI, may not be as worrisome as it seems currently. The rate was close to 3 per cent in April.

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Retail inflation seen cooling to new record low in May

indexSource: The Economic Times, June 09, 2017

Inflation in India is expected to have cooled to a new record low in May, a Reuters poll found, which could add pressure on the Reserve Bank of India to cut interest rates later in the year. The consumer price index likely rose 2.60 per cent in May from a year earlier, dipping from 2.99 per cent in April, due to a fall in the cost of pulses, cereals and perishable goods, according to the poll of 25 economists.
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RBI lowers inflation projection to 2-3.5% in first half FY18

Source: Business Standard, June 07, 2017

Mumbai: Reserve Bank of India (RBI) expects retail inflation to fall to 2-3.5% in the first half of current financial year and move up to 4.5% in the second half saying that rush for farm loan waivers may have inflationary spillovers.

The abrupt and significant retreat of inflation in April from the firming trajectory that was developing in February and March has raised several issues that have to be factored into the inflation projections, it said.

In its second Bi-monthly Monetary Policy Statement (MPC) of 2017-18, the RBI said the prices of pulses are clearly reeling under the impact of a supply glut caused by record output and imports.

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Retail inflation seen easing in April on lower food prices

Source : Financial Express, May 12 2017

Inflation seems to have cooled in April due to lower food prices, but the pullback may not give the Reserve Bank of India enough leeway to ease monetary policy anytime soon, according to a poll conducted by Reuters.

Consumer price inflation is expected to have remained below the RBI’s medium-term target of 4.0 per cent for the sixth successive month due to lower base effects and a fall in the cost of pulses, cereals and perishable goods.

The poll of more than 30 economists predicts inflation fell to a three-month low of 3.49 per cent in April from 3.81 per cent the previous month.

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CPI inflation seen at 4.8% in FY18, fears exaggerated: Report

Source: The Hindu Business Line, Apr 18, 2016

New Delhi: Retail inflation is expected at 4.8 per cent in 2017-18 and fears in this regard are exaggerated as the country will continue to witness benign prices.

According to SBI’s research report Ecowrap, the Reserve Bank’s inflation forecast of 4-4.5 per cent will be “materially undershot” as CPI inflation is unlikely to breach the 4 per cent mark till July this year.

According to official data, wholesale inflation eased to 5.7 per cent in March on declining fuel prices and appreciating rupee. Read the rest of this entry »

WPI eases to 5.7% in march, food inflation rises to 3.12%

Source: The Economic Times, Apr 18, 2017

NEW DELHI: India’s wholesale inflation eased to 5.70% in March from a three-year high of 6.55% in the previous month thanks to a slower increase in prices of fuel and in manufacturing sector, even as costlier vegetables pushed up food inflation during the month.

Food inflation firmed up to 3.12% in March from 2.69% in February, led by an inflation in vegetable prices that had been falling for the past six months. Wholesale price inflation had declined 0.45% in March last year, data released by the commerce and industry ministry on Monday showed.

“We believe that there is an upside risk to the inflation with the increasing global commodity prices and expectation of possible below-normal monsoon. A clearer picture will emerge in July-August,” said Madan Sabnavis, chief economist at CARE Ratings. Core wholesale inflation declined to 2.1% in March. Read the rest of this entry »