India CPI inflation may breach RBI's 6% tolerance band in November, says Barclays | Mint
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Business News/ Economy / India CPI inflation may breach RBI's 6% tolerance band in November, says Barclays
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India CPI inflation may breach RBI's 6% tolerance band in November, says Barclays

Barclays expects food inflation to accelerate to 9.2 per cent for November from 6.2 per cent in October due to a double-digit sequential rise in vegetable prices.

CPI inflation rose in November to 6.15 per cent year-on-year, said Barclays. Photographer: Dhiraj Singh/Bloomberg (Bloomberg)Premium
CPI inflation rose in November to 6.15 per cent year-on-year, said Barclays. Photographer: Dhiraj Singh/Bloomberg (Bloomberg)

India's consumer price index (CPI)-based inflation, or retail inflation, might have risen above the RBI's tolerance limit of 6 per cent in November, from 4.87 per cent in October, according to Barclays' estimates.

"We estimate that CPI inflation rose in November to 6.15 per cent year-on-year (YoY), a sharp reversal from the moderating trajectory over the past couple of months (October: 4.9 per cent, September: 5 per cent). Core inflation likely remained stable, and we expect further deflation in fuel prices," Barclays said in a report.

The global financial firm observed the rise will be driven primarily by higher food inflation, where the rise in vegetable prices (onions, tomatoes) and persistence in a few non-perishable items (pulses, in particular) will likely pressure the headline.

Also Read: Inflation pressures in the US eased in October, says Federal Reserve Bank of New York

Barclays expects food inflation to accelerate to 9.2 per cent for November from 6.2 per cent in October due to a double-digit sequential rise in vegetable prices.

On the other hand, fuel and light inflation may remain in deflation, at -1.3 per cent YoY for November against -0.4 per cent in October, Barclays said.

Core inflation may remain broadly stable at 4.3 per cent YoY for November, according to Barclays' estimates.

Also Read: US Fed, RBI gear up for their last policy meet of the year; will a pause continue? When to expect rate cuts?

"Despite continued strength in domestic demand, core inflation has remained under control. This may be due to either higher aggregate supply or the impact of supply shocks on the second-order effects on inflation (for example, recurring food price shocks can generalise to higher wages or transportation costs, or affect inflation expectations)," said Barclays.

"Input and output price PMIs for both manufacturing and services sector for November also showed easing input cost pressures, and consequently, a slower pace of rise in selling prices," Barclays said.

Barclays expects the RBI to remain on a cautious hold this week at its MPC meeting.

"While stable core inflation should be a relief, it will be cautious of the impact of elevated food inflation on inflation expectations," Barclays said.

Also Read: RBI monetary policy meeting begins today: Here's all you need to know

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 06 Dec 2023, 12:54 PM IST
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