By Milounee Purohit
BENGALURU (Reuters) – India’s retail inflation likely picked up in November due to higher food prices after declining for three months, bringing it closer to the upper end of the Reserve Bank of India’s (RBI) 2%-6% target range, a Reuters poll found.
Volatile food prices, which account for almost half of the inflation basket, saw an uptick in November, largely led by household staples such as onions, tomatoes and pulses, economists said.
The Dec. 5-7 Reuters poll of 41 economists predicted the consumer price index (CPI) rose at an annual rate of 5.70% in November, faster than 4.87% in October.
Forecasts ranged from 4.50%-6.50%, with a handful expecting it to breach the central bank’s top end of the target band.
However, the RBI is unlikely to act to help with the rising cost of food prices. Governor Shaktikanta Das said last month inflation was vulnerable to “recurring and overlapping” food price shocks.
“Inflation ticked up in November…partly due to higher food prices. Rice prices continued to rise by double digits, onion prices nearly doubled, and tomato price inflation also picked up again,” said Alexandra Hermann at Oxford Economics.
“Base effects may keep inflation at somewhat higher levels through December but we do expect price pressures to ease going into 2024. While food and oil prices could stand in the way … we believe upside risks are limited.”
Inflation in Asia’s third largest economy was expected to average 5.4% and 4.8% this fiscal year and next, respectively, a separate Reuters poll showed.
Meanwhile, the RBI was expected to keep its repo rate on hold this week and through to at least July.
“We expect the RBI to note the volatility from vegetable prices; however, it is likely to keep its FY24 inflation estimate unchanged at 5.4%,” noted Upasana Chachra at Morgan Stanley.
The survey also showed wholesale price inflation, the change in producer prices, likely rose to 0.08% year-on-year in November, after a 0.52% contraction in October.
(Reporting by Milounee Purohit; Polling by Devayani Sathyan, Vijayalakshmi Srinivasan and Susobhan Sarkar; Editing by Hari Kishan)
