India’s October Inflation Accelerates to Seven-Month HighBy
Consumer prices rise 3.58 percent versus 3.43 percent survey
Reserve Bank of India due to review rates over Dec. 5-6
India’s inflation quickened to a seven-month high, dimming hopes of an interest-rate cut when the central bank reviews policy early next month.
- Consumer prices rose 3.58 percent in October from a year earlier, the Statistics Ministry said in a statement in New Delhi on Monday
- That compares with the 3.43 percent median estimate in a Bloomberg survey of 39 economists
- Food price index rose 1.90 percent, compared with September’s 1.25 percent increase
- September’s inflation rate was 3.28 percent
This will be the last price print for the Reserve Bank of India before its Dec. 6 decision. Minutes of the previous meeting showed cracks within the monetary policy committee are widening as members disagreed sharply over the path for growth and inflation, resulting in five of the six voting to hold the benchmark repurchase rate at 6 percent until there’s more clarity.
The RBI had also raised its inflation forecast and lowered the growth prediction for the year through March, as the lingering effects of last year’s shock cash ban combined with the disruptive roll out of a new nationwide sales tax and climbing global oil costs. Focus now shifts to India’s gross domestic product data for July to September, due Nov. 30.
"Inflation has sequentially hardened more than what we had expected," said Rupa Rege Nitsure, Mumbai-based chief economist at L&T Finance Holdings Ltd. said by phone. "The rise in food prices in tandem with hardening fuel prices and a revival in the US markets will keep the RBI’s hands tied -- any chance of a rate cut is now remote."
- Food and beverage prices rose 2.26 percent
- Clothing and footwear rose 4.76 percent
- Fuel and lighting rose 6.36 percent
- Housing rose 6.68 percent
- Factory output grew 3.8 percent in September from a year earlier, slower than the 4.1 percent survey estimate and August’s 4.5 percent pace, data published Friday showed
- Figures due Tuesday will probably show wholesale prices rose 3.01 percent, quickening from 2.6 percent the previous month, according to a survey of Bloomberg economists
— With assistance by Manish Modi