Economist at UOB Group Barnabas Gan assessed the latest inflation figures in India.
Key Quotes
“India’s headline consumer prices rose 5.9% y/y in March 2020, the slowest in four months. Core inflation remained stable at 4.1% y/y in the same period on the back of stable services prices.”
“Food inflation is expected to spike in the coming months as domestic supply chain disruption led by the lockdown inhibited food production and packaging process. We expect food inflation to return to 10% with upside risks in 1QFY2019-2020.”
“Services inflation may however fall in the coming year as labour conditions softened dragged by the lockdown. Unemployment is expected to spike in the coming months as the lockdown left millions of migrant workers jobless.”
“Inflation in the upcoming fiscal year (FY2019-2020) is expected to fall to 3.5%, down from FY2018-19’s average of 4.8%. This is assuming that the lockdown will not be extended beyond 3rd May 2020, and food prices could moderate lower for the rest of the year.”
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