The consumer price inflation in India reached 5.1% in 2021 and, according to GlobalData, it is estimated to reach 6% in 2022. Due to rising prices for various commodities including edible oil, the CPI reached 7.0%. Due to supply chain concerns, rising crude oil prices, and geopolitical unrest, food prices, which make up about half of the inflation basket, will continue to be high. Businesses are pressured to pass on the increased expenses to consumers due to the rise in commodity prices.
Due to a slowdown in the global pricing since last month, inflation in edible oils has decreased (as per World Bank data, between May and June 2022, prices of palm oil fell by 13%, soybean oil by 11%, rapeseed oil by 9.8% and sunflower oil by 9.4%). The RBI is anticipated to keep hiking the repo rate in order to control CPI inflation, which has exceeded its desired level for six straight months.
The interest rate that a central bank charges when lending money to a commercial bank is known as the "bank rate”. The Reserve Bank of India increased its benchmark lending rate by 50 basis points in August, bringing it to pre-pandemic levels of 5.4%. This was the third consecutive increase to the rate, which was raised to combat this year's persistently high inflation.
Although India's retail inflation rate fell to 7.0% in June, the reading remained above the Reserve Bank of India's tolerance level of 6% for the sixth consecutive month. In April, consumer prices in India rose by 7.8%, an eight-year high. Inflation in food prices as a whole decreased to 7.7% in June from the previous month's 7.9%, but the cost of fuel and electricity increased to 10.3% from 9.5%.
The unemployment rate in India was at its highest level of 10.4% in 2020. According to data from the Centre for Monitoring Indian Economy (CMIE), the country's unemployment rate decreased to 6.8% in July, the lowest level in the previous six months, as agricultural activity increased during the monsoon. Due to the 13 million job losses in June and only 6.3 million job gains in July, the employment rebound from month to month was only partially successful.
Access the monthly tracker here: India: Inflation, Interest Rate, and Unemployment Rate Monthly Tracker (2019 - YTD)
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