India's September retail inflation accelerates to 5.49%
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Oct 14 (Reuters) -India's retail inflation in September accelerated at its fastest pace in nine months due to higher food prices, government data released on Monday showed.
The annual retail inflation INCPIY=ECI quickened to 5.49% in September from 3.65% a month ago, data showed. A Reuters poll of 48 economists had forecast retail inflation at 5.04%.
COMMENTARY:
GARIMA KAPOOR, ECONOMIST, INSTITUTIONAL EQUITIES, ELARA SECURITIES, MUMBAI
"September CPI inflation rose to (a) 9-month high as the favourable base effect waned off and food prices rose sharply amid supply chain disruptions led by heavy rains and imposition of import duties on edible oil."
"Hereon, as impact of war premium of oil reduces and domestic demand conditions soften, and kharif output reaches market, the upside risks to inflation should remain capped notwithstanding the volatility in food prices."
"We expect the Monetary Policy Committee to embark on (a) policy-easing cycle starting December."
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
"Inflation uncertainties continue to persist in the near term, particularly with the recent rise in commodity prices like vegetable oils."
"That said, food inflation is likely to start ebbing in the coming months as the summer crop arrives and the winter crop is also expected to do well."
"The chances of a December rate cut at this stage remain low and are likely to hinge on how commodity price pressures evolve. We do see inflation falling back below 5% by the end of 2024."
UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI
"The higher-than-expected September inflation further strengthens the case that the RBI (Reserve Bank of India) will need to remain on the cautious side. Even the next reading appears to be settling higher than 5%."
"However, the winter crop arrivals should start easing some price pressures in the weeks ahead."
"Overall, the upside surprise to inflation does prompt us to delay our rate-cut call into 2025."
RADHIKA RAO, SENIOR ECONOMIST, DBS BANK, SINGAPORE
"A narrow segment of food articles continues to muddy India's disinflation path, with non-food segments largely steady to lower, including core inflation."
"The MPC is likely to take a forward-looking view to decide on the timing of the rate cut, also factoring in the GDP outturn for July-September due late November, ahead of the next policy review."
"We expect the monsoon's strong finish to bode well for the harvest and moderate food prices towards tail end of 2024, backing the central bank's dovish pivot."
SACHCHIDANAND SHUKLA, GROUP CHIEF ECONOMIST, LARSEN & TOUBRO, MUMBAI
"(This is a) no-change-in-the-script kind of data release."
"(We expect) adverse base and continuation of higher food price momentum to continue to hold sway till November."
VIVEK KUMAR, ECONOMIST, QUANTECO RESEARCH, MUMBAI
"Notwithstanding a surplus rainfall, food inflation continues to pose concerns on account of volatility in price of perishables, along with hike in duties for edible oils."
"High frequency indicators for October do not offer any solace so far. Thereafter, the salubrious impact of a healthy kharif sowing is likely to help reduce food price pressures from November onwards."
"The silver lining in the overall inflation picture comes from core WPI inflation that decelerated to a five-month low. This should help contain the pass-through to core CPI inflation, thereby providing comfort to the MPC."
SHILAN SHAH, DEPUTY CHIEF EMERGING MARKETS ECONOMIST, CAPITAL ECONOMICS, LONDON
"Given the RBI's recent change in policy stance as well as the fact that inflation should fall back towards the 4% target over the coming months, a December rate cut still looks the most likely outcome to us."
"We maintain our forecast of a 25bps cut in the repo rate (from 6.50% to 6.25%) in its next meeting."
KUNAL KUNDU, INDIA ECONOMIST, SOCIETE GENERALE, BENGALURU
"Low statistical base effect apart, sharply higher vegetable prices pushed India's September headline inflation ... higher than our and market expectations."
"While core inflation too inched up as expected, the uptick was mainly on account of higher gold and silver prices."
"With the third-quarter inflation print exceeding the RBI's forecast, (the) probability of a December rate cut has reduced unless the October inflation data surprises on the downside."
MADHAVI ARORA, LEAD ECONOMIST, EMKAY GLOBAL, MUMBAI
"This could pressure the RBI further, which is anyway weighing various global and domestic push and pull factors before jumping the rate-cut gun."
"Meanwhile, despite commencement of the Fed's (U.S. Federal Reserve) cut cycle with a bumper 50bps, the recent upside surprises on U.S. growth, labour market, and inflation may still reignite the underappreciated risk of 'higher-for-longer' scenario."
"Besides, the event risk of November U.S. elections could materially disturb Asian FX dynamics amid ratcheting up of U.S.-China trade war."
"All this could add to global volatility, and the uncertainty may weigh on some emerging market Asian central banks' reaction function, including the RBI, and would mean the aim of financial stability may precede inflation management."
ADITI NAYAR, CHIEF ECONOMIST, ICRA, GURUGRAM
"The substantial rebound in the CPI inflation print for September has appreciably dampened the possibility of the stance change in the October policy being followed up by a rate cut in the December 2024 meeting."
"For a rate cut to be forthcoming in the December policy review, either the CPI inflation will need to flatten considerably below 5.0% in the next print or the GDP growth for the second quarter will need to significantly undershoot the MPC's expectations."
DEVENDRA KUMAR PANT, CHIEF ECONOMIST, INDIA RATINGS AND RESEARCH, GURUGRAM
"The future monetary policy action will be more data-dependent. We still believe there is a low probability of monetary easing in the rest of FY25, even if there is a rate cut, it will be more symbolic and shallow rate cut."
Reporting by Nishit Navin, Hritam Mukherjee, Dimpal Gulwani, Nandan Mandayam, Meenakshi Maidas, Mrigank Dhaniwala, Anuran Sadhu, Ashish Chandra, Varun Hebbalalu and Yagnoseni Das; Compiled by Dhanya Skariachan; Editing by Shilpi Majumdar
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