India Inflation Quickens to 15-Month High Before Rate Reviewby
CPI rises 5.61% in December versus 5.53% survey estimate
Central bank scheduled to review interest rates on Feb. 2
India’s retail inflation accelerated to the fastest pace in 15 months as food costs surged, posing a challenge to central bank Governor Raghuram Rajan’s accommodative monetary stance before the year’s first interest-rate review.
Consumer prices rose 5.61 percent in December from a year earlier after a 5.41 percent increase in November, the Statistics Ministry said in a statement on Tuesday. The median of 35 estimates in a Bloomberg News survey predicted a 5.53 percent increase. Industrial production recorded its first contraction for 2015, shrinking 3.2 percent in November compared with an estimated 2 percent gain.
"While this doesn’t put the RBI’s inflation target for January 2016 under threat, it does highlight the difficult task it faces in meeting its medium-term targets," Shilan Shah, India economist at Capital Economics Ltd., wrote in a report after the data. "This bolsters our view that there is no room for further rate cuts."
Rajan, who’s due to review policy on Feb. 2, left the benchmark rate unchanged in December after lowering it by 125 basis points earlier in 2015. India’s currency and stocks have tumbled over the past month amid deepening concerns that China’s market turmoil will spread to the economy and jeopardize global growth.
The rupee erased gains in the offshore market, with the one-month non-deliverable forward weakening to 67.22 a dollar from 67.19. Local markets were shut before the data.
* The consumer food price index rose 6.4 percent in December from a year earlier after a 6.07 percent increase in November
* The increase was led by a 46 percent surge in pulses