India's August inflation seen easing below RBI's mid-term target
poll data for retail inflation
poll data for wholesale inflation
poll data for industrial output
By Manjul Paul
BENGALURU, Sept 10 (Reuters) - Indian inflation likely eased
below the Reserve Bank of India's medium-term target in August
on softer food prices, a Reuters poll showed, raising the
probability the central bank will keep interest rates on hold at
its next rate review.
The poll of nearly 40 economists conducted from Sept. 4-7
predicted retail inflation eased to 3.86 percent
from July's 4.17 percent, below the RBI's 4 percent target for
the first time this year.
While nearly three quarters of contributors expected
inflation fell below target, two economists expected it to be at
4 percent and the remaining nine said it would be above target.
The highest call was 5.4 percent.
Inflation data is due to be published on Sept. 12 at 1200
Still, core inflation which excludes highly volatile food
and fuel components, was expected to remain elevated.
"Headline consumer price inflation is likely to have eased
in August due to another fall in food inflation," noted Shilan
Shah, a senior Indian economist at Capital Economics.
"But core price pressures are set to remain elevated. The
upshot is that the RBI's tightening cycle still has a little bit
further to run."
If those forecasts come true, it would give the RBI a
breather after it raised rates in its previous two meetings,
taking borrowing costs to a four-year high of 6.50 percent to
tame speeding inflation.
However, this could be temporary as a weakening rupee and
rising crude oil prices would boost consumer prices.
While oil prices have risen nearly 15 percent this
year, the rupee touched an all-time low of 72 per dollar
on Thursday and was expected to hover near there on a worsening
"For the RBI, the policy path is likely to get challenging
as inflation is slowing at a time when market volatility is
high, and the rupee is at a record low versus the U.S. dollar,"
wrote Radhika Rao, an economist with DBS Bank.
"If the rupee remains under pressure, the central bank might
be forced to hike rates citing risks to inflationary
India's GDP growth rate reached 8.2 percent last quarter and
the diverging paths of growth and inflation could concern RBI
The poll forecast industrial output would expand
6.6 percent in July compared with June's 7.0 percent.
WPI inflation probably inched down to 4.7
percent in August from 5.1 percent, the poll said.
(Polling by Khushboo Mittal and Vivek Mishra
Editing by Jacqueline Wong)
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