Indian inflation likely held steady at 5.60% in August, Auto News, ET Auto
Retail price inflation in India remained stable in August, remaining in the comfort zone of the central bank for a second month, as the moderation in the rise in food prices was offset by continued disruptions in the supply chain. supply, according to a Reuters poll.
The Sept. 6-8 poll of 41 economists estimated consumer price inflation at 5.60% in August from a year earlier, little change from a three-month low of 5. 59% in July. If confirmed, inflation would be in the Reserve Bank of India’s (RBI) 2% to 6% comfort range for a second month. But it has been above the medium-term target of 4% for almost two years.
“August inflation is expected to stabilize around the July figures and decline in the remaining months of 2021 due to base effects and falling food prices,” said Radhika Rao, economist at DBS. Bank. The poll’s forecasts ranged from 5.10% to 5.90%, underscoring the uncertainty that high inflation is only transitory.
August inflation is expected to stabilize around July figures and decline in the remaining months of 2021 due to base effects and lower food pricesRadhika Rao, Economist, DBS Bank
“The central bank’s revised forecast already takes into account upside risks to inflation, with the result unlikely to sway policy one way or the other,” DBS Bank’s Rao added. Last month, the central bank kept monetary policy loose, but voiced concerns about inflationary pressures on the economy.
In another Reuters poll, the RBI – which cut its key interest rate by 115 basis points cumulative last year – is expected to keep its policy unchanged until at least April, as it favors growth over inflation .
Despite the devastation of the second wave of the coronavirus, the Indian economy grew at its fastest pace on record during the June quarter, supported by a low base from a record contraction a year earlier and a strong rebound in the manufacturing sector. The RBI also kept its growth forecast at 9.5% for this fiscal year.
“With growth on track to recovery and headline inflation moderating, core inflation rigidity will become a source of discomfort for MPC members in the months to come despite the overt dovish bias.” said Kaushik Das, chief economist for India at Deutsche Bank. , referring to the RBI’s Monetary Policy Committee (MPC).
The latest poll also showed industrial production rose 10.7% in July from a year ago, down from 13.6% in June. India’s infrastructure output – which comprises eight main industries and accounts for around 40% of total factory output – rose 9.4% in July.