Workers will load consumer goods into their supply carts at the wholesale market in Kolkata, India on November 11, 2024.
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India’s consumer inflation continued to ease in June, reaching a lower than expected 2.10%, government data showed on Monday.
Headline inflation expanded its slide after falling for more than six years in May as food prices continued to decline. Economists voted by Reuters had predicted inflation rates of 2.5% in June.
The consumer price index fell for the eighth consecutive month in June.
Food inflation was -1.06% in June, compared to 0.99% in May.
Inflation data will provide more space to the Reserve Bank of India to continue to ease monetary policy after a massive 50 basis points interest rate cuts in May.
RBI Governor Sanjay Malhotra said recording higher harvests of wheat production and key pulses in the spring crop season in May would “ensure a proper supply of critical foods,” causing a prospect of further decline in food inflation.
“We expect inflation to average around 2.5% over the next six months, assisted by good weather outcomes. High bases and strong cereal production over the past three years will help us maintain food inflation for longer,” HSBC said in a note on June 30th.
“A good monsoon helps to curb inflation, boost real wages and increase purchasing power for informal sector consumers,” HSBC said.
The rise in domestic consumption will accelerate India’s economy after an exceeded forecast growth rate of 7.4% in the quarter that ended in March.
However, Malhotra warns that the country should be aware of weather-related uncertainties and concerns about tariff concerns and impact on global commodity prices.
India is negotiating with the US to attack a trade contract before President Donald Trump’s tariff deadline on August 1, and the country has failed to invite 26% of import operations.
Indian media reported last week that trade delegations are expected to travel to Washington for consultation after Trump resumed sending customs letters to the country earlier last week.
New Delhi proposed retaliation with the World Trade Organization earlier this month against the US, Reuters said a 25% tariff on Washington’s automobiles and some auto parts would affect India’s $2.89 billion exports.
