In India, the inflation rate fell below the target level of the central bank of this South Asian country for the first time in almost five years.
It is worth noting that the prevailing opinion among experts is that the mentioned dynamic of the increase in the cost of goods and services is highly likely not to cause interest rates to be cut. Officials of the central bank of India are striving to ensure that a steady decline in prices is recorded. It is for this reason that the probability of lowering the cost of borrowing against the background of new inflation data is not significant.
The consumer price index in India in July showed an increase of 3.54% year-on-year. The relevant information was released on Monday, August 12, by the Ministry of Statistics of the South Asian country. It is worth noting that the mentioned indicator is the lowest since August 2019. Experts interviewed by the media predicted the consumer price index in India to grow by 3.6% in July. The final result does not differ much from the preliminary expectations.
It is also worth noting that the central bank of India predicted that headline inflation would decrease in July for statistical reasons. At the same time, the financial regulator of the South Asian country expects that the growth in the cost of goods and services will accelerate in the period from September to December. The corresponding expectations are related to the fact that the favorable base effects are beginning to weaken.
Food prices, which make up about half of the consumer basket, rose by 5.42% year-on-year in India in July. Core inflation, which does not take into account the volatile cost of food and energy, increased to 3.37%. It is worth noting that in June, the corresponding figure was fixed at 3.15%.
The Reserve Bank of India expects average inflation in the fiscal year through March to be 4.5%.
Abhishek Gupta says that the decline in inflation to a five-year low in July provides the central bank of the Asian country with the opportunity to decide on lowering the cost of borrowing in October.
As we have reported earlier, India’s Central Bank Proposes More Options to Authenticate Digital Payments.
Serhii Mikhailov
Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.
