Food normalization and fuel-cost pass-through are expected to propel India's June CPI inflation up to 4.1% YoY from 3.9%, according to DBS economist Radhika Rao. Despite the recent drop in oil prices, she sees little upside risk to core inflation, an improved but uneven southwest monsoon, and a June trade imbalance that is still high at USD 28.5 billion.
Trade imbalance and modest CPI increase
"June CPI inflation is anticipated to increase slightly to 4.1% year over year from 3.9% the previous month due to ongoing normalization in food segments and fuel cost pass-through through associated sectors."
"Upside risks to core inflation look modest, except from food and gasoline, amid lower gold and precious metal prices and little opportunity for further pump price adjustments."
"Markets are also focused on the current southwest monsoon's geographical and spatial spread."
"Hopefully, the overall rainfall deficit has significantly decreased into July to -15% (as of 8 July), from over 40% at the end of June, with important crop-producing belts of central and northwest India seeing improvements."
"June trade numbers are unlikely to completely capture the impact of the mid-month fall in oil prices, with the trade imbalance projected to remain elevated at roughly $28.5bn."
Trade imbalance and modest CPI increase
"June CPI inflation is anticipated to increase slightly to 4.1% year over year from 3.9% the previous month due to ongoing normalization in food segments and fuel cost pass-through through associated sectors."
"Upside risks to core inflation look modest, except from food and gasoline, amid lower gold and precious metal prices and little opportunity for further pump price adjustments."
"Markets are also focused on the current southwest monsoon's geographical and spatial spread."
"Hopefully, the overall rainfall deficit has significantly decreased into July to -15% (as of 8 July), from over 40% at the end of June, with important crop-producing belts of central and northwest India seeing improvements."
"June trade numbers are unlikely to completely capture the impact of the mid-month fall in oil prices, with the trade imbalance projected to remain elevated at roughly $28.5bn."
