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Inflation likely eased to 9-month low in November: report

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Food prices alone account for almost 40% of the consumer price index basket in India. (Case)

Bengaluru:

Consumer price inflation in India likely cooled to a nine-month low of 6.40% in November, mainly due to a moderation in food prices, according to a Reuters poll of economists.

Inflation has remained above the upper limit of the Reserve Bank of India’s 2-6% tolerance range all year, triggering a 225 basis point rate hike so far interest so far, bringing it to 6.25%.

If the inflation forecast is correct, the drop would bring it back to where it was just before Russia invaded Ukraine in February, sending global food and commodity prices soaring.

Food prices alone account for almost 40% of the consumer price index (CPI) basket in Asia’s third-largest economy.

The Dec. 5-8 Reuters poll of 45 economists predicted the second consecutive drop in inflation to an annual rate of 6.40% from 6.77% in October. The forecast was in the range of 6.00% to 7.02%.

“We will continue to see inflation come down. Lower food prices, particularly vegetables, and stable energy and gasoline prices are expected to push down the headline inflation index of the country. India roughly in line with key interest rates,” noted Robert Carnell, ING’s head of Asia. Pacific research.

The RBI on Wednesday raised interest rates by just over 35 basis points after three successive 50 basis point hikes and is expected to raise them another 25 basis points in early 2023.

The central bank maintained its inflation forecast for the financial year 2022/23 at 6.7%, as in a recent Reuters poll. But economists weren’t ready to say the downtrend of recent months is here to stay.

“Granted, policymakers will need to be vigilant as headline CPI inflation is still expected to be sticky, averaging 6.5% between October 2022 and March 2023, we expect,” JP economists noted. Morgan.

“Monthly core inflation dynamics accelerated again in September and October to 0.5-0.6%, translating to 6.5% year-on-year in October In addition, there are upside risks to food inflation, especially cereals.”

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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