James HesterReuters – India’s retail inflation picked up in October to a seven-month high, driven by faster rises in prices of food and fuel products, dampening chances of an interest rate cut by the central bank next month.
India’s annual consumer inflation increased to 3.58% from a year earlier, government data showed on Monday.
Analysts polled by Reuters had expected October’s CPI inflation rate would edge up to 3.46% from September’s 3.28%.
Tax cuts
Some analysts expect India’s decision on Friday to slash tax rates on 178 items such as chocolates and detergent powder, to 18% from 28%, could marginally lower retail inflation in the coming months.
“There is, however, a low likelihood of a rate cut by the Reserve Bank of India (RBI) in the immediate term,” said Aditi Nayar, an economist at ICRA, an Indian arm of the rating agency Moody‘s, adding that inflationary expectations could remain high in the second half of the fiscal year that ends in March.
The RBI holds a policy review on December 6.
Retail inflation has been steadily rising since June, when it eased to 1.46% - its slowest pace since India started releasing such figures in January 2012, based on combined data for rural and urban consumers.