Retail inflation may have eased to a five-month low in September


Retail inflation eases to five-month low in September

Oil prices rose more than 7.5 percent and prices are forecast to remain high

The country’s retail inflation may have eased again in September, compared to the previous month and thanks to the easing of food prices, which offset the rise in crude oil and fuel prices, a Reuters poll.

The average of 37 economists in the October 5-7 referendum predicted that consumer price inflation would fall to 4.5 percent from 5.3 percent in August. Reserve Bank of India (RBI)

Forecasts for data scheduled for release on October 12 at 1200 GMT range from 4.25 percent to 5.50 percent, with only a few forecasts above five percent.

It is widely expected that the key repo rate will be kept at four per cent at the end of its monetary policy meeting on Friday as easing price pressures will provide the Reserve Bank with policy room and focus on improving economic growth.

“Despite rising fuel and core inflation, which was lower than previously expected and more grounded than last year, headline prints may be under control. Inflation prints will bring some positive surprises in the coming months,” said senior economist Sakshi Gupta. At HDFC Bank.

But price pressures were expected to resume as the economy rose.

“From December, as the base effect decreases and purchasing power in the system improves, CBI inflation will rise again to over five per cent,” Gupta of HDFC said, adding that the base effect alone could have taken the full percentage point from September inflation.

However, economists have noted that food inflation, which is generally the driving force behind overall inflation during this period, is very modest.

“Vegetable prices did not see a regular seasonal increase during this rainy season, which is largely due to harmless food inflation rather than a high base,” said Theresa John, an economist at Nirmal Bank.

“However, the prices of pulses, oils & fats and sugar have all continued to rise.”

Economists widely expect the Reserve Bank to lower its inflation estimates, but Brent crude has peaked for several years.

Oil prices rose more than 7.5 percent last month and are expected to remain high as fuel demand picks up.

According to a recent Reuters poll, India’s industrial output rose 12 percent in August, compared to 11.5 percent in July.

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