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Do Not Expect RBI To Cut Rates In December: Experts

India’s annual retail inflation in October quickened to 7.61 per centfrom a 12 months in the past

India’s annual retail inflation in October quickened to 7.61 per cent from a 12 months in the past as meals costs surged forward of the pageant season, authorities information confirmed on Thursday. Analysts in a Reuters ballot had forecast shopper costs to rise to 7.30 per cent in October, in comparison with 7.27 per cent within the earlier month. Sakshi Gupta, Senior Economist, HDFC BANK, Gurugram stated, “CPI inflation spiked to 7.6 per cent in line with our forecast. Food continues to play spoilsport. Going forward, we expect inflation to moderate somewhat December onwards. We do not expect the RBI to cut rates in December. However, we continue to see a window of opportunity for some rate action in H1 2021 before the RBI adopts a prolonged pause.”

Radhika Rao, Economist, DBS Bank, Singapore stated, “October inflation is close to our estimate and above consensus, on seasonal supply-side drivers fuelling the food component. This comes on the back of broad-based rise led by perishables and protein products. These are magnified by pandemic-related pressures as well as price cum tax rigidity in commodities, generalising it to other components.”

Sreejith Balasubramanian, Economist – Fund Management, IDFC AMC, Mumbai stated, “October CPI of 7.6 per cent was above our estimate of 7.3 per cent, owing to even-higher generalised food price sequential momentum. Price pressures have been high not just in perishables, but also in pulses and other protein-based items such as egg, meat and fish. However, inflationary pressures continue to be dominated by supply-side factors and the RBI has been very clear that monetary policy will stay accommodative into FY22, although in its latest monthly bulletin it highlighted generalisation of price pressures and unanchoring of inflation expectations as a risk to recovery.”


Anagha Deodhar, Economist ICICI Securities, Mumbai, stated, “High food inflation despite easing restrictions and improving mobility numbers indicate the problem is more complex and likely to persist in the near future. Moreover, transport costs and personal care expenses continued to be high as COVID-19 has increased transaction costs. We expect inflation to remain high in the near future and decreased chances of a rate cut.”

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