INSTANT VIEW 2-India’s October retail inflation accelerates to 4.48% y/y

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BENGALURU, Nov 12 (Businesshala) – India’s annual retail inflation rose to 4.48% in October from 4.35% in the previous month, government data released on Friday showed.

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Analysts in a Businesshala poll had predicted annual inflation at 4.32%.


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Radhika Rao, Economist, DBS Bank, Singapore “October CPI inflation recorded modest growth from September at 4.5% y/y, despite favorable base effects, validating our expectations that the moderation in inflation seen in late-3Q was not likely.”

“Base effect has placed the average CPI in Sept-October 21 within 4-5% at the upper end of RBI’s target range, but the trend in late 2021 and 1Q22 will be north of higher input prices, pass-through of imported energy side is. cost, bridging the production gap and seasonal encounters of food/pear.”

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“While support measures such as cut fuel excise duty and cut import tax have offset near-term pressures, a broader spurt in inflation could prepare the ground for a hike in the central bank reverse repo rate, followed by a change in policy stance. Change will happen.”


“Inflation in October was higher than expected driven by higher food (especially vegetable) and fuel prices. That said, inflation still remains comfortable (4.5%) and India finds itself in a sweet spot compared to the rest of the world where inflationary pressures have increased significantly.

“We expect headline inflation to remain high for the coming months, especially with the recent cut in excise duty. However, core inflation is likely to remain close to 6%, especially with the pick-up in demand.

Garima Kapoor, Economist – Institutional Equities, Elara Capital, Mumbai

“While the October inflation print was comfortably below 5% and fully in line with our expectations, there remains a major upside risk to see headwinds in the near term with respect to food price inflation due to shortage of fertilizers.”

“While the recent cuts in excise duty and VAT offer near-term relief, we will also remain alert to volatility in global energy prices. We maintain our FY22 CPI inflation forecast at 5.4%, with upside risks becoming more pronounced. (Reporting by Rama Venkat, Anuron Kumar Mitra and Chris Thomas in Bengaluru; Editing by Aditya Soni)


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