India: Headline CPI rose 0.36% in March - ANZ

ANZ analysts note that the India’s headline CPI rose further in March headline CPI rose 0.36% m/m in March, compared to 0.21% m/m in February as food prices turned positive on an annual basis for the first time in six months.

Key Quotes

“On an annual basis, inflation was above market expectations for the second month in a row. With this, inflation for Q4 FY19 (ending March 2019) averaged 2.47% y/y, marginally higher than the RBI’s revised forecast of 2.40% y/y. Full year FY19 inflation averaged 3.43% y/y, in line with our estimate.”

“Fuel prices were also inflation accretive. Nonetheless, demand pull inflationary pressures remain soft, with core CPI moderating for the fifth straight month.”

“We expect headline inflation to remain below 3% until July this year. This will likely open up room for a final 25bp rate cut by the Reserve Bank of India (RBI) at their policy meeting in August.”