The FINANCIAL — India’s consumer-inflation rate in July is expected to have fallen to its lowest level in seven months, resisting pressure from rising food prices, according to Nasdaq.
The consumer-price index likely rose 4.6% from a year earlier, according to the median estimate of 13 economists polled by The Wall Street Journal. If the reading matches the estimate, it will be the lowest since December and sharply lower than the 5.4% increase in June.
The lower inflation figure, aided by higher comparative figures from a year earlier, will help offset the rise in food prices driven by lower-than-expected seasonal rainfall.
“We expect inflation for July to moderate to 4.8% given a strong base effect,” Religare Capital Markets said in a research report. “In fact, the inflation rate both for July and August is expected to be sub-5% despite greater pressure exerted by food and fuel inflation.”
Consumer prices rose over 7% last July and August, providing a high base that is expected to subdue year-over-year price comparisons.
But once that effect fades, the inflation rate is expected to bounce to about 6% by January, the Reserve Bank of India said.
Rising food prices, particularly of vegetables and edible oils, due to damage to crops caused by below-average rainfall could also contribute to a rebound in inflation.
Last week, India’s weather department reiterated that the country would receive 12% less than the average level of rainfall in the June-to-September monsoon season this year.
Meanwhile, wholesale prices are expected to decline for the ninth month in a row, sliding 2.6% in July, the poll shows. They had fallen 2.4% in June.
“A significant fall in global commodity prices and weak domestic demand are the primary reasons why [wholesale prices] inflation has stayed in a negative growth zone,” said Rupa Rege Nitsure, chief economist at L&T Finance Holdings.
The government will announce the consumer inflation data on August 12 and wholesale prices data on August 14.
Â
Discussion about this post