- Monday, March 10, 2025
By: Shubham Ghosh
India’s retail inflation went up in September to touch a five-month high of 7.41 per cent year-on-year, propelled by surging food prices, raising fears over further rate hikes when the country’s central bank meets in December for its next policy review.
Annual retail inflation in September was higher than the 7.3 per cent forecast, indicated a Reuters poll of economists, and above seven per cent in August, data released by the National Statistics Office on Wednesday revealed.
According to the latest data, retail inflation remains above the Reserve Bank of India’s target for three quarters, implying it will have to tell government why it failed to meet the target, and what actions it will take.
Upasana Bhardwaj, chief economist, Kotak Mahindra Bank, Mumbai told Reuters, “Although broadly in line with expectations, the CPI data continues to remain elevated. The surge in prices of cereals, vegetables and pulses is continuing into October as well. The unseasonal rains are further expected to keep the food prices volatile. We expect the RBI to hike repo rate by 35-50 bps in December, with the next move being more data dependent.”
Saugata Bhattacharya, chief economist, Axis Bank, Mumbai, told the news agency, “CPI inflation printed close to our and Street forecasts. However, price momentum still remains broad-based. This will require continued monetary policy tightening, but the magnitude will depend on balancing growth and exchange rate considerations.
“The lower than expected IIP growth corroborates the narrative of a volume based slowdown, indicating stress in lower income households. Coupled with an expected exports slowing, the overall impact on growth might be more than our current expectation.”
