2 weeks ago
India Inflation May Briefly Cross 6% Before Easing
Prices in India may rise faster over the next few months.
SBI Research expects inflation to reach 4.7% in August.
It says inflation could briefly go above 6% in October and November.
After that, inflation may fall to about 5% in the last quarter of FY27.
Better food supplies could help keep prices from rising too much.
Rainfall has improved after a weak start to the monsoon.
The Reserve Bank of India wants more information before deciding whether to change interest rates.
The report also says changes in US government debt markets could affect countries around the world.
SBI Research expects India’s retail inflation to rise to 4.7% in August from 4.45% in July.
Inflation could briefly exceed 6% in October and November before easing to about 5% in Q4 FY27.
Improving food supplies, stronger rainfall and near-normal kharif sowing may help contain price pressures.
The Reserve Bank of India is seeking greater clarity on inflation before changing its policy-rate approach.
SBI Research said US Treasury-market developments and Federal Reserve measures could affect global markets.
- Who
- SBI Research made the inflation projections; the Reserve Bank of India is assessing the outlook for monetary policy.
- What
- Retail inflation may rise to 4.7% in August, briefly cross 6% in October-November, and ease to around 5% in Q4 FY27.
- Where
- India, with potential global-market effects from developments in US Treasury markets.
- When
- The projections cover August through the fourth quarter of FY27, with the expected peak in October and November.
- Why
- Improving food supplies, recovering rainfall and seasonal trends may eventually moderate inflation, while near-term price pressures could increase.
Key facts
- July inflation
- 4.45%, according to the report.
- August forecast
- 4.7%.
- October-November forecast
- Inflation could briefly breach 6%.
- Q4 FY27 forecast
- Inflation may ease to around 5%.
- Rainfall deficit
- The overall deficit narrowed to about 13%, from nearly 40% in June.
- Kharif sowing
- Sowing was around 2% below the previous season.
- RBI position
- Governor Sanjay Malhotra has said greater clarity on inflation is needed before recalibrating policy rates.
Quotes
SBI Research
Analyst team at SBI Research
“We expect August inflation print at 4.7 per cent, with inflation possibly just breaching 6 per cent in October and November before declining to ~5 per cent in Q4 of FY27”
firstpost.com
Sources
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