Indian inflation is likely to go down to the lowest level of eight years in July: Polling Reuters
The price of cooling food is the possibility of reducing Indian retail inflation to the lowest level of eight years 1.76% in July, below the low end of the Bank Reserve of India (NSE 🙂
Apart from the uneven rainy season, a strong spring harvest has helped India hold the price of food, extending the longest disinflation in the country in more than a decade.
RBI left interest rates unchanged at 5.50%, as expected, on Wednesday and said the prospect of “more docile” inflation.
Annual changes in the Consumer Price Index (CPI) subsided to 1.76% in July from 2.10% in June, according to the median estimate of the August 4-8 survey of 41 economists. Forecasts range from 1.10% to 3.10%.
If true, this will mark the inflation of the ninth month has fallen.
“We expect food inflation to be lower, to contract every year … We continue to see this moderation behind a healthy supply that comes from last year-which carries this disinflation trend,” said Sakshi Gupta, the main economist at HDFC Bank.
“Even though every month, the price of certain vegetables has gone up, the price of onions and tomatoes-but the increase is very moderate and lower than the usual seasonal trends.”
Inflation is estimated to be an average of 3.40% of this fiscal year, slightly above the estimated 3.10% RBI, a new separate reuters poll shows.
The prospect of benign inflation gives more space to support the economy, which is under pressure after US President Donald Trump sharply raises Indian goods.
“Given the challenging external environment, high US tariffs on Indian goods, the general environment of economic uncertainty and weaken domestic activity indicators, growth may disappoint,” said Dhiraj Nim, an economist at Anz. “Inflation can underline the RBI revision projection but it is not possible to loosen further.”
Core inflation, which removes volatile components such as food and fuel and more reflects domestic demand, is estimated to fall to 4.20% in July, down from around 4.30% in June.
The Indian Statistics Agency does not publish official core inflation data.
Inflation based on the wholesale price index (WPI) is expected to rise to -0.30% in July from -0.13% in June, the poll showed.
Source: Reuters
