Economists project consumer inflation reached 5.93% in October, keeping headline figures above the Reserve Bank of India's 4% medium-term goal for a fourth consecutive month. Price pressures are heavily driven by food costs, with an uneven monsoon causing onion prices to almost double since the year began. Global pressures such as elevated crude and edible oil costs are exacerbating domestic constraints, while core inflation is projected at 4.45%. In response, policymakers are widely expected to deliver a 25 basis point rate increase at their December gathering.
Key points
The Reserve Bank of India is widely expected to lift the repo rate by 25 basis points to…: The Reserve Bank of India is widely expected to lift the repo rate by 25 basis points to 5.75% in December.
Nearly half of surveyed economists anticipate that domestic consumer inflation will meet…: Nearly half of surveyed economists anticipate that domestic consumer inflation will meet or breach the central bank's 6% maximum limit.
Core inflation excluding volatile food and fuel categories is projected to register at 4.…: Core inflation excluding volatile food and fuel categories is projected to register at 4.45% for the month of October.
Sources checked by our analysis pipeline: 1
Food prices, which account for nearly 40% of India's consumer price index, have risen sharply in recent months after an uneven and deficient monsoon reduced supplies of key household staples.
Onion prices have nearly doubled since the start of the year, while even relatively less volatile protein-rich foods such as meat, milk and eggs have become more expensive.
Rising global food prices have added to domestic pressures, particularly by increasing the cost of imported edible oils and other commodities, economists said.
Annual consumer inflation likely rose to 5.93% in October from 5.54% in September, according to the median forecast in a November 2-6 Reuters poll of 36 economists. Forecasts for the data, due on November 12, ranged from 5.50% to 6.60%.
Nearly half of economists polled expect inflation to be at or above 6% in October, the upper end of the RBI's target range.
"Higher food inflation would still be the largest contributing factor to accelerating inflation," said Dhiraj Nim, senior economist at ANZ.
"The southwest monsoon outturn was very uneven and deficient overall. In many parts of the country,…
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