India’s retail inflation likely sped up in September on higher food and fuel costs, pushed up by a battered rupee and suggesting further policy tightening from the Reserve Bank of India, a Reuters poll found.
The Indian central bank last week held interest rates unchanged, surprising many market watchers who anticipated a third consecutive hike, but shifted its stance from “neutral” to “calibrated tightening” in a nod to pricing pressures.
The median of 45 economists in the poll taken Oct. 3-9 showed inflation was expected to have accelerated to the central bank’s medium-term target of 4.00 percent last month from a year ago, higher than August’s 10-month low of 3.69 percent.
ts ranged from 3.60 percent to 4.70 percent, with over 40 percent of economists expecting inflation to rise above the RBI’s target, almost one third forecast it to fall below target and the remaining 11 said it would be bang on 4.00 percent.
“Consumer price inflation is likely to have risen in September, in large part because the recent sharp fall in food inflation appears to have reversed,” said Shilan Shah, a senior India economist at Capital Economics.
“Core inflation is likely to have remained elevated. Despite the RBI keeping rates on hold last week, the tightening cycle still has a little bit further to run.”