2 min read.Updated: 09 Jun 2021, 04:47 PM ISTShaloo Shrivastava, Reuters
India's retail inflation likely rose last month after a 3-month low in April, lifted by higher food and energy prices, but stayed within the RBI's target range for the 6th consecutive month, the poll reported
India's retail inflation likely rose last month after a three-month low in April, lifted by higher food and energy prices, but stayed within the Reserve Bank of India's target range for the sixth consecutive month, a Reuters poll found.
"In April, the retail prices of petroleum products were kept unchanged because of multiple state elections being held then, despite rising crude prices," said Kunal Kundu, India economist at Societe Generale.
Inflation holding within the target range will likely help the RBI to focus its policies more towards the economy, which has taken a hit from a second coronavirus wave.
Even before that wave struck, Asia's third largest economy expanded just 1.6% in the Jan-March quarter from a year ago.
For this fiscal year, predictions for growth have been repeatedly downgraded by economists and major institutions in recent weeks.
"Concerns of pent-up demand coming in like last year are very curtailed because people have spent a large amount of their savings on health expenses," said Yuvika Singhal, economist at QuantEco Research.
"Savings in the economy are depleted and ... people would want to hold on to certain amount of liquidity."
While that suggests demand would be subdued, rising input costs were likely to pressure some components of the inflation basket higher.
The wholesale price index was expected to rise 13.07% in May from a year ago, as compared to 10.49% in April.
"Upside risks emerge from generalised increase in input prices ... starting to feed progressively into final prices charged to consumers," added ICICI's Upadhyay.
The poll also showed industrial output likely jumped 120.0% in April from a year ago, when it plunged 57.3% from a stringent lockdown imposed back then.
India's infrastructure output - which comprises of eight main industries and accounts for about 40% of the total factories' production - rose 56.1% in April.
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