India: Focus on output, not inflation – ANZ

On account of the nationwide lockdown since 25 March, India’s headline CPI index for April was not released today. For now, growth takes centre stage, according to ANZ Bank.

Key quotes

“Owing to the nationwide lockdown starting 25 March, India’s general CPI index was not released for the month of April. The indices for certain subcomponents were published, but overall the reading was far from comprehensive. Food prices rose 8.6% versus 7.8% in March owing to supply constraints.” 

“The inflation print for March was revised lower to 5.84% from 5.91% previously. Core inflation was also lowered to 3.95% from 4.07%.”

“The headline output print declined by 16.7% y/y, the weakest in several years.”

“Amid this backdrop, we believe the Reserve Bank of India will overlook inflation and stay focused on reviving growth. We expect a 50bp cut in the policy repo rate on or before their June meeting.”