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Indian Express
15-06-2025
- Business
- Indian Express
Early food price data suggests June CPI inflation may fall further to 2-2.1%
India's headline retail inflation rate may fall further to around 2 per cent in June going by daily food price data for the first half of the month after a decline in food inflation to a 43-month low of 0.99 per cent helped pull down inflation based on the Consumer Price Index (CPI) to a 75-month low of 2.82 per cent in May. According to data from the Department of Consumer Affairs, prices of four of the five pulses for which the department collects data are down 0.2-1.8 per cent on average so far in June compared to May, with only masoor dal more expensive on a sequential basis, albeit by a minor 0.1 per cent. Prices of cereals have either declined or are largely flat in the first few days of the month. Meanwhile, spices are continuing to become cheaper: after falling 1.5-2.6 per cent month-on-month in May, prices of cumin seeds, red chillies, and coriander powder are down 0.4-1.9 per cent so far in June. The June CPI inflation print will also benefit from an extremely favourable base effect, while will help drag down inflation close to the lower end of the Reserve Bank of India's (RBI) mandated target range of 2-6 per cent. To be sure, vegetables have become dearer over the last couple of weeks. As per the consumer affairs department, prices of brinjals are up 5.5 per cent month-on-month so far in June, while those of tomatoes are up a huge 19.9 per cent. Potatoes and onions, however, are seemingly cancelling each other out: while the price of the former is up 2.5 per cent, onions are down 2.2 per cent. 'Based on the month-to-date retail food price data, we are tracking June inflation at ~2.1 per cent y/y. While price pressures will remain contained due to base effects, we have started witnessing the typical summer increase in vegetable prices in the early days of June. That said, these increases for now appear to be smaller compared with the past two years,' Barclays' economists led by Aastha Gudwani said in a note last week. Japanese brokerage Nomura's economists see June CPI inflation tracking at 2 per cent, while Soumya Kanti Ghosh, State Bank of India's Group Chief Economic Adviser, noted headline inflation 'sans a la tomatina could rapidly descend towards 2 per cent or below by July'. The RBI expects CPI inflation to average 2.9 per cent in the first quarter of the current fiscal. Even if inflation stays unchanged around 2.8 per cent in June, the central bank's quarterly forecast will be met. Even though the RBI on June 6 lowered its inflation forecast for 2025-26 by 30 basis points (bps) to 3.7 per cent, most economists think the central bank's projection will be undershot meaningfully, with ICICI Bank cutting its full-year forecast to 3.3 per cent in light of the May CPI data, joining Nomura at the lower end of economists' projections. Beyond the ongoing quarter, the RBI expects inflation to rise to 3.4 per cent in July-September, 3.9 per cent in October-December, and end the fiscal at 4.4 per cent. However, according to HSBC, inflation is likely to average around 2.5 per cent for the next six months. 'It is likely that inflation in April-December period will average lower than RBI forecast, with our estimates pegged to be in the 2 per cent handle throughout this period. However, inflation in January-March next year may exceed 4.5 per cent… It is likely that central bank has been conservative with its forecasts, and has also attempted to communicate a more smoothed quarterly profile, leading to disparities versus our own forecasts,' ICICI Securities Primary Dealership said in a report. Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy. ... Read More
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Business Standard
25-05-2025
- Business
- Business Standard
Agri output likely to propel India's Q4 GDP growth to 4-quarter high
Growth in the Indian economy likely gained momentum to touch at least a four quarter high in Q4 (January - March) of FY 25 after witnessing moderate growth rates in the preceding three quarters, owing to strong showing in agricultural output that likely lifted rural consumption demand, trade, hotels and transport segment and construction sector, according to analysts. During the first three quarters of FY25, the economy grew at 6.5 per cent, 5.6 per cent, and 6.2 per cent, respectively. The National Statistics Office (NSO) has projected the FY25 growth rate at 6.5 per cent, implicitly assuming 7.6 per cent growth in the fourth quarter of FY25. The statistics ministry is scheduled to release the provisional estimates of national income for FY25 and GDP data for Q4 of FY25 on May 30. The NSO will release the Q4 growth numbers and the provisional estimates of gross domestic product (GDP) data for FY25 on Friday. High-frequency indicators like fertiliser sales (5.4 per cent) and domestic tractor sales (23.4 per cent) which can be used as proxy for agriculture sector growth saw sequential uptick during the fourth quarter. Though growth in agri credit (11.3 per cent) moderated, it still managed to remain in double digits. 'We think the agriculture sector growth is likely to show improvement, as suggested by advance estimates of crop production - which show record high wheat production. Accordingly, we estimate agriculture GVA growth at 5.8 per cent in Q4, accelerating from 5.6 per cent in Q3,' said Aastha Gudwani, India chief economist, Barclays. The strong agri output and improvement in real rural wage growth (2.3 per cent) is expected to have supported rural demand in Q4, even as urban demand remains subdued. 'According to the Neilsen IQ survey, rural FMCG sales volume growth remains strong at 8.4 per cent in Q4. That said, there isn't a uniform improvement in rural indicators with subdued two-wheeler sales and diesel consumption growth,' says Gaura Sengupta, chief economist, IDFC Bank. Indicators like passenger vehicle sales (2.3 per cent), consumer goods production (1 per cent) and personal loans (14 per cent) which reflect urban consumption moderated during the quarter. 'Real urban wage growth remains in the low single digit. FMCG sales volume growth in urban areas has weakened to 2.6 per cent. Electronic payments indicators also confirm subdued urban demand with slowdown in UPI, credit and debit card transactions growth,' adds Sengupta. However, high-frequency indicators like domestic air passenger traffic (12 per cent), toll collection (17.2 per cent), E-way bill collections (19.4 per cent) and port cargo traffic (3.7 per cent) which can be used as a proxy for 'trade, hotels and transport' segment growth, saw sequential uptick during the fourth quarter. In the services sector, higher steel consumption (11.8 per cent) and cement production (12.4 per cent) during the quarter also reflected improved construction sector growth. 'GDP growth in Q4 is likely to be supported by strong momentum in the hotels & transport segment. Anecdotal evidence shows travel activities were up in Q4 on the back of Kumbh mela and major concerts. [Alongwith] foreign tourist arrivals contracted by 1.3 per cent in Q4, lower than a contraction of 3 per cent in Q3,' said CARE Ratings in a note. Meanwhile, growth in the industrial sector is expected to remain subdued which can be gauged from proxy indicators like index of industrial production (3.6 per cent) and iron production (7.3 per cent) which saw a slowdown during the quarter.
Economic Times
21-05-2025
- Business
- Economic Times
Barclays projects 7.2% growth in Q4 for India amid tax surge and improvement in agriculture sector
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel The Indian economy is projected to expand by 7.2% in the fourth quarter of FY25, due to a sharp increase in net indirect tax growth and improvement in the agriculture sector, according to agriculture sector is expected to show improvement in Q4, with the gross value added (GVA) rising to 5.8% compared to 5.6% in Q3, it noted. The net indirect taxes grew by 30% year-on-year in the January-March the industrial sector faced a slowdown in Q4, which trimmed 9 basis points off from headline gross domestic product (GDP), said GDP grew by 6.2% in the third quarter.'With monetary easing commencing only in February and transmission still working its way through the real economy amid flush liquidity conditions, we expect a lower cost of capital to finally aid industrial growth going ahead,' said Aastha Gudwani, India chief economist, National Statistical Office (NSO) will release the GDP figures for Q4FY25 on May a separate note, Nomura projected GDP growth of 6.7% in Q4, citing moderation in private consumption, fixed investment and exports.'But a sharper contraction in import growth should mean a positive contribution from net exports to overall GDP growth,' it April, the US imposed a 26% duty on Indian goods, which was subsequently paused for 90 days until July 9. However, the baseline tariff of 10% remains in effect.'The 90-day tariff reprieve offered by President Donald Trump is expected to provide some stability to export-oriented sectors,' said will also release provisional estimates for FY25 on May and Nomura forecast a GDP growth of 6.4% and 6.2%, respectively, for FY25 -- lower than the government's estimate of 6.5% and the Reserve Bank of India's (RBI) 6.6%.Morgan Stanely on Wednesday said that domestic demand will support the economy in FY26, amidst uncertainty from external factors, projecting a growth of 6.2%.'Within domestic demand, we expect consumption recovery to become more broad-based with urban demand improving and rural consumption levels already robust,' it pegs GDP growth at 6.5%, while Nomura is more cautious, projecting 5.8% growth, citing sluggish urban consumption, moderating credit growth, and global slowdown due to inflation is expected to provide support to the economy in the current fiscal year. The average inflation rate was 4.6% in Stanley anticipates benign inflation due to lower food prices, likely to prompt the RBI to cut interest rates. Both Morgan Stanley and Nomura expect a 100 basis point rate cut this year. The monetary policy committee of the RBI had cut the policy rates by 25 basis points each in February and April, bringing the rate down to 6%.
Time of India
21-05-2025
- Business
- Time of India
Barclays projects 7.2% growth in Q4 for India amid tax surge and improvement in agriculture sector
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel The Indian economy is projected to expand by 7.2% in the fourth quarter of FY25, due to a sharp increase in net indirect tax growth and improvement in the agriculture sector, according to agriculture sector is expected to show improvement in Q4, with the gross value added (GVA) rising to 5.8% compared to 5.6% in Q3, it noted. The net indirect taxes grew by 30% year-on-year in the January-March the industrial sector faced a slowdown in Q4, which trimmed 9 basis points off from headline gross domestic product (GDP), said GDP grew by 6.2% in the third quarter.'With monetary easing commencing only in February and transmission still working its way through the real economy amid flush liquidity conditions, we expect a lower cost of capital to finally aid industrial growth going ahead,' said Aastha Gudwani, India chief economist, National Statistical Office (NSO) will release the GDP figures for Q4FY25 on May a separate note, Nomura projected GDP growth of 6.7% in Q4, citing moderation in private consumption, fixed investment and exports.'But a sharper contraction in import growth should mean a positive contribution from net exports to overall GDP growth,' it April, the US imposed a 26% duty on Indian goods, which was subsequently paused for 90 days until July 9. However, the baseline tariff of 10% remains in effect.'The 90-day tariff reprieve offered by President Donald Trump is expected to provide some stability to export-oriented sectors,' said will also release provisional estimates for FY25 on May and Nomura forecast a GDP growth of 6.4% and 6.2%, respectively, for FY25 -- lower than the government's estimate of 6.5% and the Reserve Bank of India's (RBI) 6.6%.Morgan Stanely on Wednesday said that domestic demand will support the economy in FY26, amidst uncertainty from external factors, projecting a growth of 6.2%.'Within domestic demand, we expect consumption recovery to become more broad-based with urban demand improving and rural consumption levels already robust,' it pegs GDP growth at 6.5%, while Nomura is more cautious, projecting 5.8% growth, citing sluggish urban consumption, moderating credit growth, and global slowdown due to inflation is expected to provide support to the economy in the current fiscal year. The average inflation rate was 4.6% in Stanley anticipates benign inflation due to lower food prices, likely to prompt the RBI to cut interest rates. Both Morgan Stanley and Nomura expect a 100 basis point rate cut this year. The monetary policy committee of the RBI had cut the policy rates by 25 basis points each in February and April, bringing the rate down to 6%.
Hindustan Times
15-05-2025
- Business
- Hindustan Times
Wholesale inflation at 13-month low
India's wholesale inflation, as measured by the Wholesale Price Index (WPI), fell to the lowest in 13-months at 0.9% in April, a sharp fall from 2.1% in March, according to data released by the Ministry of Commerce and Industry on Wednesday. On a month-on-month basis, the WPI contracted by 0.2%, making it the sixth consecutive month that the index has sequentially contracted. April's WPI print was lower than a projection of 1.5% by a Bloomberg poll of economists. A disaggregated analysis of the WPI data shows that wholesale inflation fell mainly on account of a deflation in the primary articles subcategory – it has a 22% share in the overall WPI basket – which includes both food items and crude oil. This sub-head contracted on an annual basis for the first time since June 2023. A deflation in food articles, specifically vegetables, was what pulled down inflation in the primary articles category. Among primary food articles, pulses and vegetables contracted by 5.6% and 18.3%, respectively. Inflation in cereals also eased to 3.8% from 5.5% in March. Disinflation in crude petroleum and natural gas doubled as the subcategory contracted by 15.6% compared to 7.6% in March. This is the eighth straight month that this subcategory has been in disinflation. 'Crude oil prices have generally remained in the USD60-65/ barrel handle in April, with downward pressure arising from OPEC+ announcing production increases. This could likely add further downside to the WPI sub-index, alongside continued favourable base effects', Aastha Gudwani, India Chief Economist, Barclays said in a note. Inflation in the fuel and power category contracted by 2.2% in April 2025. This had seen an expansion of 0.2% in March after being in disinflation for seven consecutive months. Inflation in manufactured products, which has the highest weightage of 64.2% in the index, fell to 2.6% from 3.07% in March. Within manufactured products, inflation decreased in both food and non-food products. In manufactured food products, which comprise 14% of the basket of manufactured products, inflation fell to 9.4% from 10.8% in March. In non-food manufactured products, April inflation was 1.3%, down from 1.6% in March. As inflation in both primary food articles and manufactured food items fell, inflation in the overall food group also eased to 2.6% in April 2025 from 4.7% in March. The fall in WPI comes after Tuesday's retail inflation data which fell to a six-year low in April on account of falling food and vegetable prices, increasing prospects of a rate cut in the next RBI Monetary Policy Committee meeting.
