Food prices likely pushed Indian inflation to a 16-month high in March

Price tags are seen on samples of rice and lentils for sale at a wholesale market in the old quarters of Delhi, India June 7, 2018. REUTERS/Amit Dave

BENGALURU, April 11 (Reuters) – India’s retail inflation is likely to have risen to a 16-month high of 6.35% in March, making it well above the Reserve Bank of India’s upper tolerance band for the third straight month, partly due to A sustained rise is due to food prices, a Reuters survey found.

The full impact of the rise in crude oil and global energy prices following the Russian invasion of Ukraine in late February is not expected to be reflected in consumer prices until April as the pass-through to consumers at the pump was delayed.

The April 4-8 Reuters poll of 48 economists suggested that inflation (INCPIY=ECI), as measured by the consumer price index (CPI), fell to 6.35% on an annualized basis in March from 6.07% in February. has increased. That would be the highest level since November 2020.

Forecasts for the data, due to be released around 12:00 GMT on April 12, ranged from 6.06% to 6.50%. No one expected it to fall below 6%, the upper end of the RBI’s tolerance band.

“We expect headline inflation to have accelerated to 6.30% yoy as food prices rose sequentially through February after a three-month decline,” said Dhiraj Nim, economist at ANZ, referring to the seasonal pattern of monthly changes into meal prices.

Food prices, which make up almost half of the inflation basket, are also expected to remain elevated as supply chain issues related to the Russia-Ukraine war hurt global grain production, cooking oil supplies and fertilizer exports.

Palm oil, the world’s most commonly used vegetable oil, has seen prices rise nearly 50% this year. The rise in food prices will be felt badly by millions of people living below the poverty line who have already taken a hit to jobs and incomes from the pandemic. Continue reading

Samiran Chakraborty, chief economist for India at Citi, said global commodity price increases will feature in the March inflation numbers, as will cooking oils.

“Although there was a delay in the start of gasoline price hikes after the state election, retail prices are still up INR 6.5/l in the last 10 days of March,” Chakraborty said.

Unlike the major central banks, which are faced with inflation rates at multi-decade highs, the RBI has opted to keep interest rates stable, even as inflation has crept well above its target and shows no signs of abating anytime soon are.

The RBI left its benchmark interest rate unchanged again at a record low of 4.0% on Friday. However, analysts are beginning to worry that the timing for a rate hike may already have passed. Continue reading

“You’re way behind the curve. What the Fed’s actions have shown us is that the moment you learn you were wrong, that inflation is temporary, you are forced to act more aggressively,” said Kunal Kundu, Indian economist at Societe generals

Reporting by Arsh Mogre and Vivek Mishra; Survey by Swathi Nair and Devayani Sathyan; Editing by Hugh Lawson

Our standards: The Thomson Reuters Trust Principles.