India’s consumer price index (CPI) – retail inflation may increase from the RBI’s tolerance limit of 6 per cent in November from 4.87 per cent in October, according to Barclays’ estimates.
“We estimate that CPI inflation rose in November to 6.15 per cent year-on-year (YoY), a sharp reversal from the moderating trajectory over the past couple of months (October: 4.9 per cent, September: 5 per cent). Core inflation likely remained stable and we expect further deflation in fuel prices,” Barclays said in a report.
The report observed that this rise in CPI number could be due to a surge in food prices, especially because of onions and tomatoes.
Barclays expects food inflation to accelerate to 9.2 per cent for November from 6.2 per cent in October due to a double-digit sequential rise in vegetable prices.
Whereas fuel inflation is to remain in the negative zone at -1.3 per cent YoY for November against -0.4 per cent in October, Barclays said. Core inflation to remain stable at 4.3 per cent, it added.
“Despite continued strength in domestic demand, core inflation has remained under control. This may be due to either higher aggregate supply or the impact of supply shocks on the second-order effects on inflation (for example, recurring food price shocks can generalise to higher wages or transportation costs or affect inflation expectations),” said Barclays.
Notably, RBI is to hold its Monetary Policy meeting on Wednesday.
