India: Two Months of Modi, Price Growth Slows Down
In July, consumer inflation fell to its lowest level in 5 years
At the beginning of the third month of Indian Prime Minister Narendra Modi’s new government, the Indian Ministry of Statistics released very encouraging data on the price situation in India. In July, the inflation rate based on the consumer price index fell to an annualized rate of 3.54%, the lowest level in 5 years. A ministry official explained to reporters, “India’s rural areas recorded 4.1%, while price growth slowed to 2.98 percent in urban areas.”
In the previous month, the inflation rate was 5.08% year-on-year, compared to 7.44 percent a year ago, in July 2023. As the Indian press recalled, “the target set by the Central Bank of India (Reserve Bank of India, RBI) is 4%, while the growth/decline margin is set at 2 percent.”
On August 8, the Modi government’s Monetary Policy Committee left the benchmark rate unchanged at 6.5%, as well as the repo rate, on the basis of which the regulator provides short-term loans to the country’s lending institutions.
India’s wholesale inflation also declined in July on an annualized basis to 2.04% from 3.36% recorded in June. But it was up from data for July 2023, a month when wholesale inflation was 1.23 percent. A press release from India’s Ministry of Commerce and Industry states that “the positive July 2024 figure is mainly due to higher prices of food, mineral oils, crude oil and natural gas, as well as other industrial products.” Commodities recorded an index of 3.08%, down 5.7% from the previous month’s performance.
