India’s retail inflation likely picked up in September, driven by higher food prices, but will remain comfortably below the central bank’s target and allow room for further policy easing, a Reuters poll showed.
The consumer price index was expected to rise 4.3 per cent last month, with forecasts in the survey of over 20 economists ranging between 3.6 per cent and 5.0 per cent.
In August, consumer inflation fell to a record low of 3.66 per cent, down from nearly 9 per cent last year.
Falling commodity prices, which have fueled a global disinflationary trend, pushed Indian inflation down over the past year, giving the Reserve Bank of India room to ease monetary policy four times since January, bringing its key repo rate down to a 4-1/2 year low of 6.75 per cent.
Even if inflation picks up in September as economists predict, it would still be comfortably below the RBI’s 6 percent target for January.
“The central bank’s CPI inflation target of 6 per cent for January 2016 is unlikely to come under threat, as core inflation should remain anchored amid signs of continued economic slack,” said Capital Economics’ Shilan Shah in a research note.
Still, with rainfall 14 per cent below normal in the June-September monsoon season, food prices could be affected in coming months.
The RBI estimates inflation will be 5.8 per cent in January.
Industrial output is expected to have grown 4.8 per cent in August, faster than the 4.2 per cent seen in July. Poll forecasts ranged from 2.2 to 6.7 per cent.
Although a survey last week showed manufacturing activity slowed to a seven-month low in September, factory production has been growing above 2 per cent since November.