India’s August CPI: Experts Predict 7.08%, RBI Target Concerns


On September 12, 2023, India is set to release its Consumer Price Index (CPI) data for August. Experts anticipate that it will hover around 7.08 percent, a slight reduction from July’s 7.44 percent. However, this figure still exceeds the Reserve Bank of India’s (RBI) target of 6 percent, raising concerns. Especially when compared to the 7 percent from the previous year.

Additionally, core inflation, expected to be approximately 4.8 percent for August, is showing a slight decline from last year’s 5.9 percent and July’s 4.9 percent.

This could be interpreted as a positive sign, indicating that prices in sectors of the economy with minimal fluctuations are not rising as rapidly.

One significant contributor to elevated prices in India is the food sector, projected to register at 10 percent for August.

While this represents a marginal improvement compared to July’s 11.5 percent. It remains a focal point of concern for the RBI. The central bank aims to prevent rapid increases in food prices, as it complicates achieving the 6 percent target.

As of now, the RBI is expect to maintain the status quo regarding interest rates, reserving any substantial changes for scenarios involving worsening inflation. Consequently, all eyes are on forthcoming CPI reports, with hopes of figures falling below 7 percent. Potentially allowing the RBI greater flexibility in its actions.

In addition to the CPI data, another critical indicator to watch is the Index of Industrial Production (IIP) for July, with experts predicting a figure of 5.2 percent.

This metric offers insights into the level of industrial activity within India’s factories. If the actual value falls short of expectations, it could signify challenges for the nation’s economic growth prospects.