Explore India's latest macroeconomic trends and forecasts to inform business strategy and pinpoint opportunities and risks

India: Inflation, Interest Rate, and Unemployment Rate Monthly Tracker (2019 - YTD)

  • The consumer price inflation rate of India reached 6.8% in October 2022, a rise of 0.6% compared to the previous month September 2022
  • In 2022, the bank interest rate in November 2022 stood at 5.90% which remained the same as in October 2022. Since 2019, the highest level and for the fifth time since the beginning of the current fiscal year 2022
  • The unemployment rate in India hit 8% in November 2022, with a low-level labor force participation in urban areas, rising from a level of 7.77% in October 2022

The country's retail inflation, as determined by the Consumer Price Index (CPI), hit 6.8% in October 2022, down from 7.4% in September, exceeding the market forecast. The CPI increased in October 2022, continuing its tenth consecutive month of growth above the Reserve Bank of India's (RBI) upper limit of 6%. The government has mandated the central to maintain retail inflation at 4%, with a margin of 2% on either side for a five-year term ending in March 2026.

In order to manage inflation, the Monetary Policy Committee (MPC) of the Indian central bank increased the interest rates by 190 basis points during this fiscal year to control the raging inflation. However, despite their move, retail inflation continues to remain above the upper tolerance level. The Consumer Food Price Index (CFPI), which measures the inflation in the food basket, decreased month over month in October to 7.01% from 8.60% in September. On the other hand, last month showed an increase in vegetables by 7.77% year over year, cereals, and goods by 12.08%, and spices by 18.02%. Price increases for meat, fish and dairy products totaled 7.69%, 3.08%, and 5.20% respectively.

The interest rate in November 2022 was 5.90%, remaining constant from October 2022 in India. The key lending rate of the Reserve Bank of India is increased by 50 basis points to 5.90%, the highest level since 2019 and the fourth increase since the start of the current fiscal year 2022 after increases of 40 basis points in May, 50 basis points in June and 50 basis points in August 2022. Sales of homes are probably going to suffer, particularly in the affordable and middle-income categories as borrowing became expensive.

Since January of this year, the central bank has been acting to control inflation, which has been running beyond the RBI's comfortable range of 6%. Due to the current state of global geopolitics and the high price of commodities, inflation will increase so as a result Reserve bank of India raised interest rates making borrowing more expensive to reduce high inflation. According to a survey of analysts, the Reserve Bank of India will increase interest rates in December by a more moderate 35 basis points to 6.25% to reduce residual inflation pressures.

According to statistics from the Centre for Monitoring Indian Economy, the unemployment rate in India increased to 8% in November from 7.77% in October, indicating the highest level in three months. In November, the unemployment rate in urban areas increased to 8.96% from 7.21%, while it decreased in rural areas to 7.55% from 8.04% in October.

The states with the highest unemployment rates in India in November 2022 were Haryana (30.6%), Rajasthan (24.5%), Jammu and Kashmir (23.9%), Bihar (17.3%), and Tripura (14.5%), while Chhattisgarh had the lowest unemployment rate in October (0.1%), followed by Uttarakhand (1.2%), Odisha (1.6%), Karnataka (1.8%) and Meghalaya (2.1%). The main causes of unemployment in India are four different forms of unemployment. Structural, frictional, seasonal, and cyclical unemployment are the four types of unemployment. By increasing public spending during difficult economic periods, expansionary monetary policy can help us overcome seasonal and cyclical unemployment.

Explore India's latest macroeconomic trends and forecasts to inform business strategy and pinpoint opportunities and risks Explore India's latest macroeconomic trends and forecasts to inform business strategy and pinpoint opportunities and risks Visit Report Store
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