India’s retail inflation climbed up to a 10-month high of 3.21% in August but stayed below the central bank’s 4% medium-term target, strengthening expectations of another rate cut next month.
Inflation based on the Consumer Price Index was 3.15% in July and 3.69% in August 2018. The previous high was 3.38% in October 2018.
Inflation in the food basket was 2.99%, up from 2.36% in July. However, retail inflation is within the Reserve Bank India’s target range of 4%, with deviation of 2% on either side. The RBI governor-led Monetary Policy Committee will take a call on interest rates on October 4.
Inflation mainly originated from meat and fish, vegetables, pulses and products, health, education, and personal care and effects.
Inflation in meat and fish basket was 8.51%, pulses and products 6.94% and vegetables 6.9%. Retail inflation in health was 7.84%, recreation and amusement 5.54 % and personal care and effects 6.38 %. Price rise in the ‘education’ segment was recorded at 6.1% in August.
Economists expect CPI to inch up going ahead but remain within the RBI’s target.
CARE Ratings expects policy rates to be cut by another 40 bps for the remainder of the financial year.