DBS forecasts steady inflation and a widening trade deficit for India in July, driven by fuel adjustments and resilient imports.
India’s July inflation is expected to remain unchanged at 4.4% year-on-year, with core inflation staying below 4% due to softer precious metals prices. Food staples show mixed trends, while fuel price adjustments may lift utilities and fuel components in the data due next week.
High-frequency data indicates rising prices for pulses, sugar, milk, and edible oils, though vegetable prices have stabilized. A rebound in July rainfall has supported sowing activity. Meanwhile, non-subsidized LPG prices rose 10% year-on-year in July, likely impacting utilities and fuel segments.
Trade data is projected to show resilient exports but stronger imports, keeping the deficit near USD 29–30 billion, close to June’s levels. The outlook reflects persistent pressure on India’s trade balance despite export strength.