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Consumer Inflation Likely To Ease, But Stay Above 7% For Third Straight Month: Poll – Unblendednews

Consumer Inflation Likely To Ease, But Stay Above 7% For Third Straight Month: Poll


Consumer Inflation Likely To Ease, But Stay Above 7% For Third Straight Month: Poll

If realised, November’s rate would be above 7.0% for the third consecutive month.


Retail inflation in the country probably fell in November from October but remained above the Reserve Bank of India’s target, amid high food and petrol prices, a poll of economists by news agency Reuters showed. Retail inflation has stayed above the central bank’s comfort zone of 2-6 per cent for seven consecutive months, a streak not seen since August 2014.

The December 4-9 poll of 48 economists forecast a drop in inflation in November to 7.10 per cent from 7.61 per cent in October, which was the highest since May 2014.

If realised, November’s rate would be above 7.0 per cent for the third consecutive month.

“Inflation for November is likely to be lower than October as there was some moderation in prices of vegetables in particular as well as pulses,” said Madan Sabnavis, chief economist at CARE Ratings. “On the upside, petrol prices had increased which worked in the other direction.”

At its December 2-4 meeting, the RBI kept its key repo rate at 4.0 per cent and the Monetary Policy Committee retained its accommodative stance while ensuring ample liquidity, playing a delicate balancing act of curbing high inflation and bolstering a nascent economic recovery.

The central bank also said inflation would remain elevated.


“There is still a lot of liquidity sloshing around in the system, which in combination with normalizing economic activity might produce a dangerous inflationary cocktail,” said Hugo Erken, head of International economics at Rabobank.

The economy will suffer its worst contraction on record this fiscal year, and recent government stimulus does not go far enough to significantly boost activity depressed by the coronavirus pandemic, according to economists polled by Reuters. 

Asia’s third-largest economy contracted 7.5 per cent in the quarter ending in September after declining 23.9 per cent in the April-June quarter.

The poll predicted industrial output rose 1.1 per cent in October from a year earlier on strong manufacturing production ahead of the festive season. In September, industrial production was in positive territory for the first time since February 2020.

Infrastructure output, which accounts for about 40 per cent of total industrial production, contracted 2.5 per cent in October.


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