Rural inflation much higher than urban in the last three years

download (6).jpgSource:, Sept 22, 2017

While overall inflation has come down substantially over the past three years, inflation for the rural consumer has been significantly higher than for the urban population. The accompanying chart, which has the point-to-point Consumer Price Index (CPI)-based inflation for the last three years (August 2017 compared to August 2014) has the details.

What is intriguing is that even for farm prices, such as for pulses or for milk and even cereals, consumer prices have risen more in rural India. Prices of health and education services too have moved up faster in rural areas.

With farm incomes being under pressure after two years of bad monsoon, the rise in rural prices could explain the sluggishness in rural demand, as well as the relative robustness of urban demand.

The silver lining is that the latest CPI numbers for August show that rural inflation has been slightly slower in the past one year than urban inflation. This trend needs to continue.



IIP rises only 1.2%, food inflation at 5-month high

Source: Business Standard, Sept. 13, 2017

The data on the Index of Industrial Production (IIP) and consumer price index (CPI)-based inflation, released on Tuesday, were more bad news for the Narendra Modi government, after growth of gross domestic product(GDP) crashed to its lowest in its tenure last week.

The IIP data showed that economic activity was yet to pick up. Food items becoming more expensive and some services turning pricier because of the goods and services tax (GST) meant CPI-based inflation remained high.

In July, the IIP grew by only 1.2 per cent over the same month last year, recovering slightly from a contraction of 0.1 per cent in June. Read the rest of this entry »

August inflation seen at 5-month high on rising food costs

Source:, Sept 11, 2017

Bengaluru: India’s retail inflation is expected to have picked up to a five-month high in August, largely driven by higher food costs, a Reuters poll showed, easing pressure on the Reserve Bank of India (RBI) to cut interest rates again after poor growth data.

Consumer prices were forecast up at 3.20% in August from a year ago, jumping from July’s 2.36%, according to the poll taken on 5-8 September of nearly 40 economists.

Forecasts for the data, scheduled to be released on 12 September at 1200 GMT, ranged from 2.50% to 3.55%. Read the rest of this entry »

Retail inflation to stay well within RBI’s 2-6% target: BofAML

download (2).jpgSource: The Hindu Business Line, Aug 21, 2017

New Delhi: Retail inflation is likely to stay well within the RBI’s 2-6 per cent mandate in the coming months and accordingly, the central bank is expected to cut policy rates by 25 bps on December 6.

According to Bank of America Merrill Lynch (BofAML), inflationary pressures are expected to remain contained by good rains, low growth and subdued imported inflation amid decrease in global commodity prices.The global brokerage firm said that after a pause in the October policy review meet, the Reserve Bank is expected to go for a 25 bps cut in key policy rates in its December 6 meet.

Read the rest of this entry »

India’s retail inflation rises to 2.36 percent in July

Source: The Economic Times, Aug 14, 2017

MUMBAI: India’s annual consumer price inflation picked up to 2.36 percent in July from 1.54 percent in June, as a decline in food prices slowed sharply, government data showed on Monday.

The rise was faster than the 1.87 percent forecast by economists in a Reuters poll. Inflation was 1.54 percent in June – the slowest pace since India started releasing retail inflation data in January 2012 based on combined data for rural and urban consumers.

Commenting on the figures, Anjali Verma, economist, Phillipcapital India, said: “(Inflation of) 2.36 percent is in line with our expectations. This has largely been led by higher vegetable prices, which is also reflecting in WPI.

Read the rest of this entry »

Retail inflation seen picking up for 1st time in 4 months in July

Source: Business Standard, Aug 09, 2017

Bengaluru: India’s retail inflation is expected to have picked up slightly in July after cooling in the previous three months, a Reuters poll showed, but likely remained well below the central bank’s 4 per cent medium-term target.

Much of the increase is attributed to the return of food inflation. Vegetable prices have risen sharply following erratic monsoon rains.

The consumer price index likely rose 1.87 per cent last month, after dipping to a historic low of 1.54 per cent in June, according to the median forecast of nearly 30 economists.

But forecasts ranged from 0.90 per cent to 3.60 per cent. The data is expected to be released on Aug. 14 at 1200 GMT.

Read the rest of this entry »

Inflation likely to remain subdued: Assocham

Source: The Economic Times, July 17, 2017

NEW DELHI: Inflation is expected to remain subdued on account of good monsoon and the inability of the industry to raise prices, Assocham today said.

“Going forward, there could be some disruption for one or two vegetables such as tomatoes but overall, the situation is going to remain quite comfortable for the consumers at least till October-November,” the chamber said in a statement.

It said floods in some parts of the country may also play a spoilsport.

However, a vigil needs to be maintained for ensuring that farmers are protected from the market distortions and the procurement agencies like the Food Corporation of India and other government wings are fully geared to lift the farm produce in time and at remunerative rates, it added.”With the country set to reap a record foodgrains production and the industry not enjoying any pricing power, the inflation outlook remains quite muted at least till festival season,” it added.