India inflation nears RBI's upper target: Poll
India's consumer inflation appears to be edging closer to the Reserve Bank of India's upper 6% target, according to a poll of economists. A broad-based rise in food prices, which make up nearly 40% of the household cost, has pushed up household spending, a Reuters report revealed.
Food prices, a major component of India's Consumer Price Index, have surged in recent months due to an uneven monsoon and reduced supplies of essential food items. Onion prices, for instance, have nearly doubled since the beginning of the year. Apart from staple foods, protein-rich items like meat, milk, and eggs have also become more expensive. Global food price hikes have further tightened domestic supplies, especially by boosting the cost of imported commodities such as edible oils.
Economists forecast that India's annual consumer inflation could have risen to 5.93% in October from 5.54% in September, as per a November 2-6 Reuters poll of 36 economists. Forecasts for the upcoming data, scheduled for November 12, range from 5.50% to 6.60%. Around half of the polled economists anticipate inflation to be at or above 6% in October, which is the upper limit of the RBI's target range.
Dhiraj Nim, a senior economist at ANZ, noted that higher food inflation would continue to drive inflationary pressures. The monsoon's uneven and deficient performance has exacerbated the situation in many parts of the country, resembling drought-like conditions. As a result, economists believe that India might remain in an elevated inflation period for an extended duration.
Rising food inflation is expected to hit 8.20% in October from 7.74% in September, as per the poll. Rahul Bajoria, head of India and ASEAN economic research at BofA Securities, anticipates meat, fish, oils and fats, fruits, vegetables, and sugar to report double-digit inflation. The report further highlights that inflation has been above the RBI's 4% medium-term target for four straight months.
Economists believe that price pressures will likely persist in the coming months with oil prices remaining about 40% above their pre-war levels.
Written by urgent.news from The Economic Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
