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India’s inflation drops to three-month low

A tougher monetary policy pursued by the central bank appears to be working

India’s consumer-price index for October rose 6.77% from the same month a year ago, compared with 7.4% in September, according to data released by the Ministry of Statistics & Programme Implementation on Monday.

The positive results aren’t enough to force the Reserve bank of India (RBI) to consider pausing interest-rate increases just yet, as the figure has still remained above the regulator’s tolerance band of 2-6% for the tenth month in row. 

Headline inflation grew by 0.80% from 0.57% in the previous month. Inflation in the food basket was recorded at 7.01%, versus 8.6% in the preceding month.

Non-food, non-oil core inflation, which act as a key factor for the country’s rate setters, came in at 6.23%. Prices for clothing and footwear increased by 10.16%, while prices for housing rose 4.58% during the month on a year-on-year basis.

“With inflation staying above 6%, RBI cannot stop raising rates right now,” Rahul Bajoria, India economist at Barclays Bank told Bloomberg. “But with several price indicators showing a moderation in momentum, the size of rate increases could be tempered.”

READ MORE: India’s GDP to double over next decade – economist

The regulator has hiked the key interest rate by 190 basis points to 5.90% since May. Economists at Goldman Sachs Group project the benchmark policy rate to grow to 6.75% by February.

The RBI could opt for a 35 basis points rate hike in December, compared to the previous three hikes of 50 basis points each, according to Aditi Nayar, an economist at ICRA, as cited by the agency.

For more stories on economy & finance visit RT’s business section

https://ift.tt/ZzWM5h0 15, 2022 at 12:03PM
from RT – Daily news

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