Customers who sail through products in a store on the outskirts of New Delhi, India, in February as prices continue to increase, with inflation figures by March about 7%.
Anindito Mukherjee/Bloomberg through Getty Images | Bloomberg | Bloomberg | Getty images
After relaxing for nine consecutive months, Indian consumer inflation rose to 2.07% in August, in line with analysts’ estimates, according to government data on Friday.
The increase in August inflation was “attributed mainly to the increase in inflation of vegetables, meat and fish, oil and fats, personal care and affections, the egg,” the government said in a statement.
Food inflation fell 0.69% year after year in August, in a slowdown in the decrease in food price of 1.76% in July, as mustard oil and tomato prices recovered.
The medium estimates of the economists surveyed by Reuters had set the inflation rate of the holders annual to 2.1% after the growth of prices in July reached 1.55%, the lowest since June 2017, thoroughly of the decrease in food inflation.
Despite the increase in August, India inflation looms near the target inflation band of the Indian reserve bank from 2% to 6%. The central bank last month predicted an IPC growth of 3.1% for the fiscal year that ends in March 2026.
“We hope that inflation will accelerate even more in the coming months, although the effects of GST rates cuts should reduce the acceleration rhythm from October onwards,” said Hanna Luchnikava-Schorsch, head of the Economy of Asia-Pacific in S&P Global Market Intelligence, and added that the consumer inflation is expected It extends until the end of March 2026.
Benign inflation readings offer the Central Bank Chamber to loosen monetary policy and cushion the impact of American tariffs on the growth of the country.
“India inflation remains below the trend, which probably supports private demand and facilitates the reduction of additional monetary policies by the Bank of the Reserve of India, partially mitigating the impact of uncertainty related to the growth rate,” Luchnikava-Schorsch said.
In August, Washington imposed an additional rate of 25% to Indian imports on Russian oil purchases in New Delhi, which increases total tasks up to 50%, among the highest levies of any of Washington’s commercial partners.
The measure is expected to shave 0.6 percentage points of the annual rate of Indian GDP for the fiscal year, according to a Goldman Sachs report.
In an attempt to stimulate national consumption to compensate for exports, the Government announced generalized cuts to goods and services on September 3. It is expected that the goods, cars and agricultural products of rapid movement will become cheaper once these cuts enter into force on September 22.
Citi economists expect the expenditure power of Indian homes to improve “0.7% and 0.8% of GDP in the fiscal year that ends in March 2026”. They also see the GST cuts that reduce inflation by 1.1 percentage points if the full tax cut is transmitted to consumers.
Many leading car companies, such as Tata Motors and Maruti SuzukiThey have already declared price cuts, transmitting the benefits of customer tax cuts. Many consumer goods companies, such as Hindustan Unilever, Colgate-Palmolive And Mars Wrigley is also looking to reduce prices.
Last month, the economy of India increased faster than expected at an annual rate of 7.8% in the quarter of April-June, driven by manufacturing, construction and services sectors. Although the nominal growth showed signs of deceleration, the low level of inflation caused the growth rate to look stronger, economists said.
