Return of Pricing Power to Keep India Retail Prices Elevated
- Consumer price gains seen staying above 6% until February
- Firms will likely use lower input costs to recoup margins
A shopper browses clothes in a market in Lucknow, India.
Photographer: Anindito Mukherjee/BloombergThis article is for subscribers only.
Indian consumers expecting retail inflation to cool in tandem with easing wholesale prices are in for disappointment.
That’s because the consumer price index, currently hovering above the central bank’s 2%-6% target band, has shown little correlation with the wholesale measure in the past decade. And if historical trends are any indication, the two indexes have had an inverse relationship for the most part of that period, which analysts attribute to the pricing power of most businesses.