India: inflation seen moderating into 2020 – UOB

Economist at UOB Group Barnabas Gan gives his views on the recently published inflation figures in India.

Key Quotes

“India’s headline inflation surged 7.35% y/y in December 2019, surprising market estimates for a mere 6.70% and clocking its highest rate since July 2014. However, core inflation remains tame at 3.7% y/y in the same month, slightly higher than 3.5% in November. Note that headline inflation had breached the upper end of the Reserve Bank of India’s (RBI) 2 – 6% target band for the first time since July 2016, in which policy-makers had previously kept its benchmark rate unchanged citing “much higher than expected” inflation. Accounting for December’s inflation, India’s consumer prices had risen by an average of 3.7% for the full year of 2019.”

“The risk of higher food prices had been documented in the latest RBI monetary policy statement as well as the meeting minutes in December 2019.”

“Higher energy prices could have also led inflation higher in December, owing to the positive uptick in fuel and light prices, as well as the rise of transport & communication costs.”

“Going forward, inflation may moderate lower into 2020 ... More importantly, given that inflation had surpassed RBI’s inflation range of 2 – 6% to-date, policy makers could remain reluctant to inject further accommodative measures via rate cuts in its upcoming February MPC meeting as it may exacerbate the increase in consumer prices in the year ahead. Still, we pencil one more rate cut in the first quarter of 2020 should India’s domestic economy remains weak amid a soft automobile industry, poor external environment and an uncomfortably high unemployment rate.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD challenges weekly lows after mixed Durable Goods Orders

US Durable Goods Orders were up a measly 0.4% in August, missing expectations of 1.0%, although Nondefense Capital Goods Orders ex Aircraft jumped 1.8%. Equities bounce from lows, but the dollar maintains its strength.


GBP/USD loses 1.2700 as the dollar keeps rallying

GBP/USD approaches its weekly low at 1.2674 as demand for the American currency extends into the final trading session of the week. Hopes for a UK trade deal with the EU doing little for Sterling.


Gold: Finally some rest bite as XAU/USD holds at $1865 per ounce

It has not been the best week for the gold bugs as the yellow metal has fallen 4.36% since Monday. At the end of the week, the price has started to consolidate at the USD 1865 per ounce area. 

Gold News

Breaking: ​​​​​​​The IRS makes it hard to pretend you don’t have Bitcoin

The cryptocurrency holders might have a hard time trying to hide their Bitcoins or other digital assets. IRS considers changing the standard 1040 form by including a bold question on the front page:  At any time during 2020, did you sell, receive, send, exchange, or otherwise acquire any financial interest in any virtual currency? 

Read more

WTI moves back to flat and once again trades above $40 per barrel

It has been a mixed Friday for WTI as the price is moving sideways heading into the weekend. All of the excitement was last week when the OPEC+ JMMC decided to keep output levels at their current rate until December.

Oil News