India: CPI ‘Eases’ to 9.9% in July

Econintersect:  In June the CPI for India came in at 9.93%.  In July the number was 9.86%.  Both figures are official releases of the India Central Statistics Office.  The headline in The Times of India says “inflation eases” in July.  Econintersect notes that both numbers round to 9.9% so we were tempted to make our headline slightly different than we did, namely:  “India Inflation Eases from 9.9% to 9.9%.”

The persistent inflation is driven most strongly by food price inflation which is likely to remain if not worsen due to subnormal rainfall from this year’s poor monsoon.

Food prices have remained a persistent challenge for Indian policy makers after appearing to start to moderate during the winter.  (See GEI News.)  Some of the problem areas were identified by The Times of India:

Vegetables prices rose an annual 27.33% in July while prices of oils and fats shot up 17.37% year-on-year across the country. Eggs, fish and meat also sustained their increase rising an annual 11.11% at the combined level. Economists say drought in some states may impact food prices and lack of progress in easing supply side pressures could lead to a sharp spike in food prices.

Wholesale inflation showed a decline that actually was statistically signficant, falling from 7.3% in June to 6.9% for July.

John Lounsbury

Sources:

• Retail inflation eases to 9.86% in July (The Times of India, 22 August 2012)

• India:  Inflation Lower, Rupee Higher (GEI News, 18 January 2012)

• Econintersect Asia/Pacific newspaper page