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Reuters poll: inflation likely to remain steady at 5.90% in December


(Reuters) – India’s retail inflation held steady in December, staying in the Reserve Bank of India’s safe zone for a second month as moderate increases in food prices were partially offset by core inflation. surging, a Reuters poll of economists showed.

A January 4-9 poll of 45 economists put consumer price inflation at 5.90% in December from a year earlier, little changed from an 11-month low. was 5.88% in November.

If confirmed, inflation will be in the RBI’s 2-6% comfort range for a second month but it has been above the medium-term target of 4% for more than three years.

Forecasts range from 5.40% to 6.40%.

But wholesale inflation may have dropped to 5.60% last month from a year ago, down from 5.85% in November.

“I think the continued decline in food prices is likely to have a moderate impact on inflation, however, we do not consider the drop to be too drastic from the last meeting, because core inflation will continue. stay high. And that will provide a floor,” said Sakshi Gupta, chief economist at HDFC Bank.

Core inflation, when volatile food and energy prices are removed, is seen by central banks around the world as a better measure of the persistence of price pressures and remains high in India. Degree.

Most economists expect core inflation to remain high in the coming months.

RBI Governor Shaktikanta Das recently said the bank will continue its fight against inflation despite the worst being “behind us”, suggesting the central bank is likely to remain hawkish next time.

Aastha Gudwani, India economist at BofA, writes: “We have emphasized that setting monetary policy in India will be a two-step process: the first is to bring inflation into a tolerable range. and then bring it closer to the 4% target. Stock.

“While we have reached the first milestone, we still do not see CPI inflation drop to 4% and as such, the RBI MPC is likely to continue to raise rates further albeit at a slower pace. .”

How does inflation affect the stock market?

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How does inflation affect the stock market?

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