INSUBCONTINENT EXCLUSIVE:
Inflation data is due to be published on September 12 at 5:30 pm IST.BENGALURU: Inflation likely eased below the Reserve Bank of India's
medium-term target in August on softer food prices, a Reuters poll showed, raising the probability the central bank will keep interest rates
on hold at its next rate review
The poll of nearly 40 economists conducted from September 4-7 predicted retail inflation eased to 3.86 per cent from July's 4.17 per cent,
below the RBI's 4 per cent target for the first time this year
While nearly three quarters of contributors expected inflation fell below target, two economists expected it to be at 4 per cent and the
remaining nine said it would be above target
The highest call was 5.4 per cent.Inflation data is due to be published on September 12 at 1200 GMT or 5:30 pm IST.Still, core inflation
which excludes highly volatile food and fuel components, was expected to remain elevated."Headline consumer price inflation is likely to
have eased in August due to another fall in food inflation," noted Shilan Shah, a senior Indian economist at Capital Economics."But core
price pressures are set to remain elevated
The upshot is that the RBI's tightening cycle still has a little bit further to run."If those forecasts come true, it would give the RBI a
breather after it raised rates in its previous two meetings, taking borrowing costs to a four-year high of 6.50 per cent to tame speeding
inflation.However, this could be temporary as a weakening rupee and rising crude oil prices would boost consumer prices.While oil prices
have risen nearly 15 per cent this year, the rupee touched an all-time low of 72 per dollar on Thursday and was expected to hover near there
on a worsening trade balance."For the RBI, the policy path is likely to get challenging as inflation is slowing at a time when market
volatility is high, and the rupee is at a record low versus the US dollar," wrote Radhika Rao, an economist with DBS Bank."If the rupee
remains under pressure, the central bank might be forced to hike rates citing risks to inflationary expectations."The GDP growth rate
reached 8.2 per cent last quarter and the diverging paths of growth and inflation could concern RBI policymakers.The poll forecast
industrial output would expand 6.6 per cent in July compared with June's 7.0 per cent
edited by TheIndianSubcontinent staff and is auto-generated from a syndicated feed.)
