NEW DELHI (Reuters) – Indian retail inflation accelerated to a three-month high in February on higher fuel prices, which could challenge the central bank’s agricultural stance and lower policy levels. used to boost the economy hit by pandemics.
Annual sales inflation rose 5.03% in February, up from 4.06% in January, and below the 4.83% forecast in the Reuters poll of economists, data released by the Ministry of Statistics on Friday showed.
Retail petrol prices in the national capital New Delhi have risen nearly 9% so far this year, while diesel prices are up above 10%, pushed up by federal taxes and higher state, urging Prime Minister Narendra Modi to cut taxes.
The Monetary Reserve Bank of India (MPC) Monetary Policy Committee, which kept the benchmark repo rate unchanged at 4% last month, is expected to keep rates unchanged at its next meeting from April 5-7.
After cutting the repo rate by 115 basis points to sustain the economy during the coronavirus crisis, the central bank has kept the policy rate unchanged from May, 2020.
Analysts said high commodity prices will continue to follow inflation in the coming months.
“Global crude prices will continue to drive up inflation risks and CPI (retail inflation) will continue to rise,” said Rahul Gupta of Emkay Global Financial Services.
“Currently CPI is within RBI’s target range but at the April meeting, the central bank will have to deal with rising inflation and rising bond yields,” Gupta said.
India’s economy is expected to hold 8% in the current financial year ending in March before growing at around 11% in the next financial year.
Retail food prices, which make up nearly half of India’s inflation basket, rose 3.87% in February year-on-year compared to 1.96% in January.
Core inflation, excluding food and fuel costs, was estimated in the range of 5.61% -5.9% for the month by four economists, compared with 5.5% -5.7% in January.
India will not provide basic inflation official data.
Additional statement by Chris Thomas; Edited by Edmund Blair and Chizu Nomiyama