India’s retail inflation on steady rise on the back of high food prices, may inch up to 7.3% | The Financial Express

India’s retail inflation on steady rise on the back of high food prices, may inch up to 7.3%

The numbers projected in Barclays report are the result of an uptick in prices of staples such as cereals, pulses, vegetables, spices, and dairy. As a result, the food inflation could rise to 8.5 per cent on-year in September, the report added.

India’s retail inflation on steady rise on the back of high food prices, may inch up to 7.3%
RBI projected the inflation levels in Q3 and Q4 of FY23 at 6.5 per cent and 5.8 per cent respectively. (Photo Credits: PTI)

Buoyant food prices may drive India’s retail inflation to 7.3 per cent on-year in September – 30 basis points higher than that in August, according to a forecast released by Barclays. If so, this will be the ninth consecutive month when the inflation rate remained above RBI’s inflation target band of 4 per cent with +/- 2 per cent variation. The numbers projected in Barclays report are the result of an uptick in prices of staples such as cereals, pulses, vegetables, spices, and dairy. As a result, the food inflation could rise to 8.5 per cent on-year in September, the report added.

Also Read: Modi govt releases Rs 7,183 cr revenue deficit grant to 14 states; check which states got most and least funds

Commenting on the rising inflation rates, Rahul Bajoria, India Economist, Barclays, said, “While this implies nine straight months of above target band inflation, we expect inflation to fall sharply in October, on a combination of high base effects, declining imported prices, and some sequential reversal in food prices.” Bajoria, addressing the food prices, also added that beyond cereals, the uptick in food prices is largely seasonal, wherein the price of commodities rise before the harvesting period. Thus, a reversal in increasing food prices can be expected in the coming months “barring any extreme weather events.” One of the key factors that can curb the rising inflation are the moderating imported food price pressures. The primary focus is on the prices of cooking oil, cooking gas and kerosene, and feedstock, which are set to decline, albeit marginally, the report noted.

The Reserve Bank of India, on September 30, released the Monetary Policy Committee (MPC) report and decided to increase the policy repo rate by 50 basis point to 5.9 per cent to ensure that inflation remains within target going forward. The central bank cited risks associated with geopolitical conditions, erratic rainfalls, and continuing appreciation of the US dollar and its effect on the future trajectory of inflation. RBI projected the inflation levels in Q3 and Q4 of FY23 at 6.5 per cent and 5.8 per cent respectively, which aligns with the projections released by Barclays. “With imported price pressures declining, we expect inflation to move lower in Q4,” the report stated.

Also Read: India Services growth loses momentum, September PMI shows weakest expansion since March; price pressures hurt

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.