, India

India’s retail inflation to hit 6% in 2022: GlobalData

This follows the ban on wheat exports India imposed.

The retail inflation in India is projected to remain high and hit 6.04% in 2022, up from 5.14% in 2021, GlobalData reported. 

This comes after India imposed a ban on wheat exports, which GlobalData economist Arnab Nath expected to slow down the increase in prices. 

“India’s decision to ban wheat exports may slow down the sharp rise in domestic prices of wheat but may not decline due to supply-side constraints as the crops were damaged by the extreme heatwave across the country,” Nath said. 

GlobalData had hiked its 2022 inflation rate forecast by 0.8 percentage points in May 2022 amidst the increasing prices of food and transport. 

“Supply-side constraints and the consequent rise in food and fuel prices drove the wholesale price inflation to 17 year high of 15.08% in April 2022,” Nath also noted. 

He said the higher prices will likely be passed on to consumers. Starting September 2021, consumer food prices in India have started increasing in September 2021. 

Over the last eight months, the consumer food inflation rate rose by 2.8 points to reach a t0-month high of 4.59% in April 2022. The overall consumer price inflation rate increased to 7.79% in April 2022, the highest since June 2014.

“The elevated inflation level is unlikely to correct anytime soon, and GlobalData expects the Reserve Bank of India to tighten the money supply in the economy. Meanwhile, following the supply-side disruption caused by the Russia-Ukraine crisis, India’s ban on wheat exports is a further blow to the world food market,” he said. 

“GlobalData projects the world inflation rate to rise to 6.72% in 2022, an upward revision from the 4.97% projected in February 2022 and an increase from 3.5% in 2021.”

 

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