India inflation jumps to 4.82% in August as price pressures broaden

By Shubham Batra and Nikunj Ohri

NEW DELHI, Sept 14 (Reuters) – India’s annual retail inflation accelerated in August as price pressures spread beyond food and transport, strengthening the case for a ​rate hike by the central bank next month.

The August print ‌of 4.82% was marginally higher than a 4.80% inflation that the economists were expecting in a Reuters poll and 4.45% in the previous month. It was also the highest under the new series which began in January.

The pickup in ‌inflation ​ran close to or above 4% in categories ⁠including clothing, household goods ⁠and education, while inflation in food-serving services rose to 8.41% from 7.75% in July.

Kotak Mahindra Bank’s chief economist Upasna Bhardwaj said she continues to see scope for 50-75 basis points of rate ​hikes by the monetary policy committee, with now the odds of an action in its next meeting in October “increasing significantly”.

The central ⁠bank left its benchmark policy rate unchanged ⁠at 5.25% last month, but minutes of its last ​monetary policy meeting showed that some RBI officials, including Governor Sanjay ​Malhotra, favoured a rate hike if inflation spread across segments.

The ‌rate-hike concerns have intensified over the past month as a sustained rise in global oil prices threatens to add to inflation pressures, with Brent crude futures near $108 a barrel.

India imports nearly 85% of its ⁠oil needs, more than half of it from the Middle East, where the U.S.-Iran war has caused major supply disruptions.

Still, Asia’s third-largest economy continues to ⁠be an outlier ‌among regional peers such as Indonesia and the ⁠Philippines that have raised rates in response to ​higher energy ‌prices and currency volatility.

India’s food inflation climbed to ​5.95% in ⁠August from 5.52% in July on the back of weak monsoon showers, with sharp increases in prices of staples such as ginger, onion and garlic.

Transport inflation accelerated to 4.60% in August from 4.43% in the previous month.

(Reporting by Shubham Batra in New Delhi; Editing by Vijay Kishore ​and Nivedita Bhattacharjee)