India’s economic growth is accelerating, and after increasing until April 2022, inflation has declined. Mid-September 2022’s monthly macroeconomic data releases are anticipated to continue most of these tendencies world economy is presently experiencing a significant slowdown in growth. Nevertheless, despite some initial signs of a slowdown, average global inflation is still very nearly at its highest level in several decades. India is resisting this trend to some extent.
India’s industrial growth in July 2022 is projected to stay in the same range after exceeding 12% growth in June 2022. India was recovering from the second wave of the epidemic in the same month of 2021. As a result, the month’s starting point is slightly favorable. We are also noticing an increase in the pace of India’s economic activity.
Consumer spending increased at a record rate for the GDP quarter that ended in June 2022. The percentage of fixed investments to GDP reached a ten-year high. The loss of export momentum is a dangerous element. The lack of external demand is not encouraging for the medium-term outlook of India’s industrial operations, as manufactured goods make up more than 75% of the country’s exports of goods. While, Retail inflation began to decline in July 2022, especially after reaching a peak of 7.8% in April 2022.
In contrast to a small softening of wholesale price inflation, a hardening of retail price inflation is anticipated in August 2022. Since March 2021, wholesale price inflation has remained much greater than retail price inflation, mostly due to the hardening of non-farm commodities prices. This would go on, but the gap would probably close. Since October 2021, wholesale price inflation has been in the teens. In August 2022, it’s predicted to fall just below the teens.
It is not a favorable situation to be in when there are external sector pressures on growth, retail inflation that is significantly higher than the higher end of the central bank’s target range, and wholesale price inflation that is in double digits for the 17th consecutive month. India is still significantly better positioned than almost all of its contemporaries, with the best growth rate and outlook among the systemically important nations, lower inflation than the majority of advanced nations, and the worst inflation behind.
