India’s inflation surges to 8-month high on soaring food prices

Things are likely to get worse for India amid commodity-supply disruptions caused by Russia’s war in Ukraine.

Shoppers at a market during the Diwali festival in New Delhi, India
Consumer prices in India rose 6.1 percent last month from a year earlier, faster than what economists had predicted [File: Anindito Mukherjee/Bloomberg]

India’s headline inflation surged to an eight-month high in February on higher food prices, with the outlook set to worsen amid commodity-supply disruptions caused by Russia’s war in Ukraine.

Consumer prices rose 6.1% last month from a year earlier, the Statistics Ministry said in a statement Monday. That’s faster than the median estimate for a 6% gain seen in a Bloomberg survey of economists and well above the upper end of the Reserve Bank of India’s inflation target band.

The war-fueled uncertainty is likely to force the central bank to revisit its inflation and growth forecasts at its policy meeting next month. Although, it’s unlikely to force the RBI to tighten interest rates just yet, given policy makers’ are intent on supporting the economy’s durable recovery.

India's retail inflation breached RBI's 6% for two consecutive months

Digging Deeper

  • Rising costs of food and clothing and footwear contributed to the price growth last month, data showed. Food prices jumped 5.9%, clothing and footwear prices gained 8.9% and housing prices climbed 3.6%. Fuel and electricity prices rose 8.7%, slower than the 9.3% pace seen in January
  • Pump prices have been frozen for more than four months coinciding with elections in some key Indian states. That could change if fuel retailers start passing on higher crude prices caused by Russia’s war
  • Rising prices could weigh on consumption amid high frequency indicators pointing to risks for the world’s fastest-growing major economy
  • Amid high input costs and supply shortages, wholesale inflation quickened to 13.1% in February, data released separately showed Monday.

(Updates with details of inflation print under ‘Digging Deeper’ section)

–With assistance from Tomoko Sato.

Source: Bloomberg