India with its high inflation an exception among Asian economies: Moody’s Analytics
Concern that inflation is the next big concern in Asia has gathered pace and this is being driven by rising oil prices and economies starting to reopen, helped by the global vaccine rollout gathering pace.
New Delhi: Most of the Asian economies are experiencing a period of modest inflation, except for India and Philippines where inflation is above comfortable levels adding to challenges for policy makers, Moody’s Analytics has said.
“India is another economy where inflation is worrisome. Higher fuel prices will keep upward pressure on headline Consumer Price Index (CPI) and keep the reserve Bank of India (RBI) from offering further rate cuts,” the financial intelligence company said in a report.
It said concern that inflation is the next big concern in Asia has gathered pace and this is being driven by rising oil prices and economies starting to reopen, helped by the global vaccine rollout gathering pace.
Indiaʼs CPI rose to 5 per cent in February from 4.1 per cent in January. Food and beverage price growth gained 4.3 per cent from 2.7 per cent in January. Food is a key driver of inflation, representing 46 per cent of the CPI basket.
Retail inflation has held above the RBI’s 4 per cent target for the past eight months. Indiaʼs core CPI (excludes food, fuel and light) was up 5.6 per cent in February from 5.3 per cent in January.
Volatile food prices and rising oil prices led Indiaʼs CPI to exceed the upper band of 6 per cent several times in 2020, inhibiting the RBIʼs ability to keep accommodative monetary settings in place during the height of the pandemic.
According to the report, inflation data released this week from Hong Kong, Singapore and Malaysia show inflation is modest in these economies, and that is the case in most of Asia, with the exception of India and Philippines.