Inflation likely at 7.3% in Sep: Mint poll
2 min read 09 Oct 2022, 11:56 PM ISTEconomists said there were significant chances of the rising inflationary trend to reverse over the next few months
PremiumNEW DELHI : Retail inflation is likely to have soared in September to a five-month high due to rising food prices and a low base, according to a Mint poll of 24 economists. The survey’s median estimate showed inflation is expected to rise to 7.3% from 7% in August.
If the prediction holds, this will be the ninth consecutive month of inflation remaining higher than the Reserve Bank of India’s 6% upper tolerance limit. Poll predictions ranged from 7.03% to 7.50%.
The official inflation data for September will be released on Wednesday.
Economists, however, said there were significant chances of the rising inflationary trend to reverse over the next few months.
Inflation had shown a downtrend between April and July, before rising again. However, the low base of last year may be partly responsible for the rising headline figure: September 2021 had recorded the lowest inflation rate of 4.35%, in the last 17 months.
Prices of fruits and vegetables moved up, and along with cereals and ready-made foods, may add to food inflation in September, Madan Sabnavis, chief economist, Bank of Baroda, said.
Personal products and household goods in the miscellaneous categories have also witnessed high inflation, he added.
“The increases in food prices appear largely seasonal, as several commodities tend to rise before harvesting; hence, we expect these trends to reverse in the coming months barring extreme weather events," Rahul Bajoria, chief economist, Barclays, said in a report on 5 October.
According to its latest policy meeting, the RBI expects inflation to fall within a few months.
It estimates inflation of 6.5% in the October-December quarter and 5.8% in the quarter ending March 2023.
Amid the high inflationary scenario across major global economies, economists agree with the RBI’s projection and said inflation in India will start easing from the beginning of next year. “I concur with the RBI’s assessment," said Dhiraj Nim, economist, ANZ Bank. “Beginning next fiscal year, if oil prices remain contained, we may see inflation falling."
Over the next few months, economists said factors such as oil prices and the depreciation of the rupee are key upside risks to inflation in India. Last week, major oil producers announced that they would reduce production starting November to reverse the decline in crude oil prices in recent times.
Economists at Barclays also expect core inflation to have remained sticky above 6% in September despite the “tempering of cost-push pressures and reductions in imported costs".
