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NEW DELHI : India’s retail inflation rate likely eased further to a nine-month low of 6.36% in November, down from 6.77% in October, according to the median prediction of a Mint poll ahead of the scheduled data release on Monday.

The drop was likely driven by a moderation in prices of food, particularly vegetables, and a decline in imported inflation. It is likely that the string of high inflation rates peaked at 7.41% in September.

Moderating price pressures
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Moderating price pressures

The inflation expectations in the poll, which covered 18 economists, ranged from 6.00% to 6.64%. Despite the drop in inflation, it is set to range above the acceptable target of 2-6% for the 11th straight month, supporting the central bank’s reluctance to call off the rate hiking cycle beyond the policy meeting earlier this week.

“Healthy rabi sowing has improved the outlook for the food inflation, and the disruption related to the impact of the unseasonal rainfall may be less than what was feared," said Aditi Nayar, chief economist at Icra Ltd. “We expect a favourable base to soften the food and headline CPI inflation print for November 2022," Nayar added.

This will be a sigh of relief for the Reserve Bank of India, which has delivered a cumulative 225 basis points hike in the repo rate since May, taking it to 6.25%, to combat persistently high inflation. The RBI eased the quantum of rate hike to 35 basis points at its meeting this week after three consecutive 50-basis-point hikes, as inflation showed signs of slowing, and the economy stood resilient to global impact.

Most economists expect inflation to fall below the 6% threshold only in the March quarter. The RBI expects inflation to average 6.6% in the current quarter, at 5.9% in the March-ending quarter and 5.0% in the June-ending quarter next year.

Core inflation, which excludes volatile items food and fuel, is widely expected to be sticky and closer to 6% in November, keeping headline inflation above its target band for another month.

“Underlying core CPI momentum remains strong given upward pressure on services inflation, even as goods prices correct lower," said Kanika Pasricha, an economist at Standard Chartered Bank.

ABOUT THE AUTHOR

Manjul Paul

Manjul Paul is a data journalist. She joined Mint in October 2021. Previously, she worked witth the Reuters polling team in Bangalore as a correspondent for four years.
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