India’s consumer inflation likely rose to 5.93% in October from 5.54% in September, close to the upper limit of the Reserve Bank of India’s (RBI) 2% to 6% target range, according to a Reuters poll of 36 economists conducted on November 2-6. Forecasts ranged from 5.50% to 6.60%, and nearly half of the economists expect inflation at or above 6%. Official data are due on November 12.
Food prices, which account for nearly 40% of India’s consumer price index, have risen sharply after an uneven and deficient monsoon reduced supplies of key staples. Food inflation likely rose to 8.20% in October from 7.74% in September. Protein-rich foods such as meat, milk and eggs have also become more expensive, and economists expect double-digit inflation in categories including fruits, oils and fats, and sugar. Rising global food prices have added to the pressure by increasing the cost of imported edible oils and other commodities. Wholesale inflation likely accelerated to 12.10%, which could feed into retail prices in the coming months.
Inflation has stayed above the RBI’s 4% medium-term target for four consecutive months, and economists expect price pressures to persist, with oil prices still about 40% above their pre-war levels. The RBI, which began raising rates in October, now expects inflation to average 5.2% this financial year. It is widely expected to raise its repo rate again to 5.75% at its December meeting.
