Macroeconomic Forecast India

ndia's benchmark wholesale price index (WPI) rose by 2.1% month-on-month (m-o-m) in April, the fastest monthly increase since June 2008. This, in turn, saw headline inflation rise to 7.2% y-o-y from 6.9% in the previous month. While food prices have largely driven this uptick - primary articles inflation has risen 7.4 percentage points since the start of the year to 9.7% - all major components of the WPI registered an increase. These numbers reinforce our view that the Reserve Bank of India (RBI) will refrain from lowering its benchmark interest rate further following last month's 50 basis point cut to 8.00%.

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