INSTANT VIEW -India’s retail inflation eases to 4.35% y/y in Sept

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BENGALURU, Oct 12 (Businesshala) – India’s annual retail inflation fell to 4.35% in September from 5.30% in the previous month, government data released on Tuesday showed.

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Analysts in a Businesshala poll had predicted annual inflation at 4.5%.

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Radhika Rao, Economist, DBS Bank, Singapore

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“The moderation scale in September CPI inflation was along expected lines, providing a momentary relief. The major part of the pullback is due to base effect and administrative steps (lower import duty on edible oils etc.), notwithstanding, core inflation surpassed the headline to remain stable at 5.8% year-on-year.

“We expect the downdrift to last for the next few months, potentially slipping below 4%, before reversing higher.”

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“Beyond the near-term relief, delayed rains boosting staples (vegetables), higher energy/coal prices pass-through, rising input prices, service sector reopening pressures and dwindling base impacts from headline CPI Likely to come back above 5.0. % yo in March 2022 quarter.”

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

“September inflation print fell below 4.5% for the first time in five months, supported by a higher base effect and a boarding cooling of food inflation. While the moderation in inflation for September is encouraging, higher energy and vegetable prices in October supported the kharif crop. There may be a small reversal in the trend of food inflation before the arrival of seasonal easing on account of the arrivals of the U.S.

“We see risks of sticky core inflation print during the year amid the pass-through effect of higher energy prices and higher intermediate input prices due to supply disruptions in China. We expect FY22 CPI inflation to be 5.4% But with a slight upward bias.” (Reporting by Rama Venkat in Bengaluru; Editing by Aditya Soni)

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