India Expecting High CPI Thanks to Groceries

According to poll from Reuters, the consumer price index (CPI) due on Tuesday is expected to show a rise of 7.4 percent from the year ago period compared to a 7.3 percent gain in June, while the wholesale price index is expected to climb an annual 5.1 percent in July compared to a 5.4 percent increase in June.

But some analysts have targets of over 8 percent on-year rise for the CPI, on the back of costlier vegetables and a delayed monsoon season.  According to a note by DBS, vegetable prices were up 25 percent year on year in July, which will be felt the most among low-income households who spend the bulk of their income on food staples.

Meanwhile, although the recent monsoon season has improved,the rainfall levels remain around 17 percent below average, according to IHS Global Insight.  “This could reduce crop yields and push up prices for keyfood staples,” said Rajiv Biswas, IHS chief economist for Asia Pacific, who sees July CPI at 7.9 percent.


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