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India's October retail inflation touches seven-month high

Reuters  |  NEW DELHI 

By Manoj Kumar

(Reuters) - India's retail picked up in October to a seven-month high, driven by faster rises in prices of food and fuel products, dampening chances of an cut by the central next month.

India's annual consumer in October increased to 3.58 percent from a year earlier, government data showed on Monday.

Analysts polled by had expected October's CPI rate would edge up to 3.46 percent from September's 3.28 percent.

Some analysts expect India's decision on Friday to slash tax rates on 178 items such as chocolates and detergent powders to 18 percent from 28 percent could marginally lower retail in coming months.

"There is, however, a low likelihood of a rate cut by the RBI in the immediate term," said Aditi Nayar, an economist at ICRA, an Indian arm of the rating agency Moody's, adding that inflationary expectations could remain high in the second half of the fiscal year that ends in March.

RBI holds a policy review on Dec. 6.

Retail has been steadily rising since June, when it eased to 1.46 percent - its slowest pace since started releasing such figures in January 2012, based on combined data for rural and urban consumers.

Separately, annual industrial output grew a lower-than-expected 3.8 percent in September, compared with the forecast of 4.2 percent by economists in a poll, data released on Friday showed.

Prices pressures are building just as the Reserve of projected last month to rise in October-March to 4.2-4.6 percent, above its medium-target of 4 percent, while leaving rates unchanged.

Crude prices have rallied, sending Brent crude to its highest since June 2015, a worry given that imports most of its energy needs.

Despite a cut in taxes, retail petrol prices have gone up by 7.6 percent and diesel by 6.6 percent in in the last year.

Prime Minister Narendra Modi, who faces crucial state elections in his home state of Gujarat next month, is under pressure to revive economic growth, which slipped to 5.7 percent in the April-June quarter, the slowest pace in three years.

New Delhi, facing risks of a widening fiscal deficit this year mainly due to lower growth in revenue receipts, wants the RBI to ease policy rates to support private investments and revive economic growth.

(Reporting by Manoj Kumar; Editing by Richard Borsuk and Nick Macfie)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, November 13 2017. 18:15 IST