India’s inflation is expected to average around 2.5 per cent over the next six months, according to a report by HSBC Global Research released on Friday.
The report attributed the softer inflation outlook to a high base effect from last year, as well as stable food prices and adequate grain supplies. Data for June is already trending slightly below May levels, it noted.
“Vegetable prices in the first 10 days of June have increased in the range of 0–13 per cent, but the high base from last year is helping keep overall inflation in check,” HSBC said in its outlook.
The monsoon, which began early this year, has slowed recently. Despite this, the sowing of key summer crops such as rice and pulses is reportedly progressing well. Combined with strong cereal production from last year, this has helped keep granaries well-stocked—providing the government with flexibility to release grain stocks gradually and manage food inflation over a longer horizon.
Headline and core inflation (excluding gold) stood at 2.8 per cent. Food prices remained in deflation for the fifth consecutive month, falling by 0.2 per cent on a month-on-month basis. Prices of items such as fruits, eggs, fish, meat, and sugar showed subdued momentum.
However, high gold prices continue to exert upward pressure on core inflation. With gold accounting for 1.1 per cent of the Consumer Price Index (CPI) basket, and prices having risen by over 30 per cent in recent months, core inflation remains slightly elevated. Excluding gold, HSBC estimates core inflation at 3.5 per cent year-on-year.
Looking ahead, the report forecasts that core inflation could ease further in the second half of 2025 if gold prices decline, as projected by HSBC’s commodities team. It also expects external factors to aid disinflation, including a stronger rupee, falling commodity prices, and weaker global demand—particularly from China.
(With IANS input)