Inflation in India has accelerated in March. Data from India’s Ministry of Statistics & Programme Implementation shows Annual retail inflation rose to 5.52%, up from 5.03% in February. The official figure was above the expectations of most analysts.
Oxford Economics Senior Asia Economist, Sian Fenner told Bloomberg Daybreak Asia, the India inflation data is in line with a pick up in inflation across the Asia region. But she says it must be viewed in the context of rising from a low base.
“That’s (India’s March inflation figures) a comparison from a very low base last year when we saw oil prices fall dramatically. Of course oil prices have picked up and we’re seeing that through on the transport side, we’ve also seen some kind of food price rise as well, but we actually think that these are fairly transitory,” said Ms Fenner.
“You’ve got to remember in Asia there are a number of factors that can effectively contain inflation and that includes the administrative controls that they have in place and I mean fundamentally we still have very large output gaps which means those demand pull pressures are still fairly weak, particularly the labour market side.”
The senior economist said she expects inflation across Asian economies to trend upwards for the year as a whole, peaking in the second quarter, then moderating towards the second half of the year.
It’s been a volatile start to the year for Indian stock markets as the country continues to grapple with COVID-19. However the Nifty 50 index is up almost 80% from its low in April 2020.