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INSTANT VIEW-India's October retail inflation at 6.09% on-year

By Reuters News

Nov 12 (Reuters) - NEW DELHI, Nov 12 (Reuters) - India's annual retail inflation INCPIY=ECI stood at 6.09% in October against 5.54% in September, government data showed on Thursday.

A Reuters poll had projected retail inflation at 5.93%.

India's central bank has a medium-term inflation target of 4%, with a tolerance band of 2% to 6% on either side.


RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE


India's headline inflation tested past the upper end of the RBI's tolerance band in Oct to a two year high, with a sharp food driven upmove accompanied by signs of broadening out of price pressures on sequential basis. With headline inflation yet to peak, compounded by an unfavourable base effect, the central bank's quarterly projection is likely to be revised higher. The data reinforces our expectation of a second successive rate hike in December.


ALEXANDRA HERMANN PRASAD, LEAD ECONOMIST, OXFORD ECONOMICS, LONDON

"Inflation surpassed the 6% mark for the first time in two years in October, but the peak likely still lies ahead. Food price pressures have surged and will continue intensifying while higher energy costs continue feeding through to core goods and services, even if strengthening oil-company profits thanks to higher refining margins and the recent decline in crude prices reduce the urgency of an adjustment to petrol and diesel prices.

Broadening core price pressures and elevated inflation expectations should prompt two more 25bps RBI hikes in December and February, but softening consumer demand and thus weakening firm pricing power should help contain inflation thereafter."

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