India consumer inflation rises to 0.71% in November
Shoppers buy groceries at the luxury LuLu Hypermarket at Lulu International Mall in Kerala, India, on May 25, 2022.
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India’s consumer inflation rose to 0.71% in November from an all-time low of 0.25% in the previous month.
The headline inflation figure was: on the line According to a Reuters survey of economists’ median forecasts, a 0.70% increase in the consumer price index is predicted.
The increase in consumer inflation was due to increases in prices of vegetables, eggs, meat and fish, spices and fuel, the government said on Friday, adding that fuel and light prices increased by 2.32% in November compared to 1.98% in October.
Inflation rose in both urban and rural areas.
The low inflation environment, coupled with the weakening of some key economic indicators, led India’s central bank to cut policy rates by 25 basis points last week, allowing the country to boost its already strong economic growth.
The Reserve Bank of India expects consumer inflation to be 2% for the fiscal year ending March 2026, down from October’s forecast of 2.6%. It forecasts CPI to be 2.9% in the three months to March, rising to 4.0% in the quarter ending September 2026.
“The growth-inflation balance, particularly the positive inflation outlook in both headline and core, continues to provide policy space to support growth momentum,” the central bank said in a statement after last week’s monetary policy meeting. he said.
RBI Governor Sanjay Malhotra said the low inflation outlook allowed the central bank to “remain supportive of growth”, adding that the central bank “will continue to proactively meet the productive requirements of the economy”.
Experts are divided on whether the 25 basis point cut will be the last in this easing cycle or the RBI may ease further, given Malhotra’s “dovish” signals.
HSBC Research said in its report published last week after the monetary policy announcement, “We believe that weak growth in the future, low inflation in the long term and tight fiscal policy may require a growth-supportive monetary policy in 2026.”
In August, the US imposed an additional 25% tariff on Indian imports, raising the total duty to 50%; this is among the highest taxes Washington has imposed on its trading partners; The most affected are textiles, gems and jewelery and seafood.
While exports to the US account for just 2% of India’s GDP, a prolonged weakness in labour-intensive sectors could lead to job losses and negatively impact overall growth.
To cushion the blow, New Delhi rationalized its goods and services tax regime and reduced taxes on various items on September 22 in a bid to revive domestic demand ahead of the month-long festive season. Tax cuts increased consumption by reducing the prices of consumer goods, vehicles and agricultural products.
While consumption rose, exports to the US, one of India’s major trading partners, fell for the second consecutive month in October. 8.5% It increased to 6.3 billion dollars compared to a year ago. In general, outgoing shipments in October are also down 11.8% It reached 34.38 billion dollars.
The Indian rupee has fallen to record lows against the dollar and was trading below 90 rupees per dollar on Friday, as a deal between New Delhi and Washington has not been on the horizon for the last few days and there has been a decline in exports.
