, India

Higher July headline inflation rate expected in India

Following results of rising CPI inflation.

Amid the release of India's July WPI inflation results, headline inflation is expected to rise 5.5%

YoY (market: 5.1%) from 5.4% the month before.

According to a research note from DBS, CPI inflation released earlier in the week rose 8.0% YoY from the revised June’s 7.5% on higher vegetable price index.

The same factor is likely to keep the WPI reading elevated, while the fuel index benefits from stable rupee and commodity prices.

Here’s more from DBS:

At the same time, the PMI-manufacturing price sub-component signaled at pipeline risks as input prices rose sharply in July.

Improving business conditions might prompt manufacturers to pass on the higher costs to end-consumers.

As it stands, the manufacturing WPI index quickened marginally to 3.6% YoY in the Jun14 quarter, from 3.0% last year.

Core WPI (non-food manufacturing inflation) has also picked steam to 3.9% from 2.9% last year, with an anticipated recovery in aggregate demand likely to bring demand-pull forces back to the table.

Against this backdrop, the Reserve Bank of India (RBI) is expected to maintain a cautious stance and remain on prolonged pause on rates in FY15.

In comments yesterday, RBI Governor Raghuram Rajan stressed that while high rates were painful in the short-term, it was the ideal policy stance of the long-term to contain inflation.

Join Singapore Business Review community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!