The Reserve Bank of India's failure to keep inflation within the mandated 2-6 percent band will likely be confirmed later in October.
Inflation rose for the second month in a row to a five-month high in September according to a Moneycontrol poll of 18 economists.
Retail inflation data for September will be released later today.
"In September, daily prices of 22 essential food items are up by 0.9 percent month-on-month on average vs - 0.1 percent month-on-month in August."
The 0.8 percent month-on-month increase for food and beverages in September is based on all the available data. If food inflation surprises sharply to the upside, it is possible for headlineCPI inflation to rise closer to the April peak of 7.8 percent.
CPI inflation had risen to a near eight-year high of 7.79 percent in April.| ORGANISATION | ESTIMATE FOR SEPTEMBER CPI INFLATION |
| L&T Financial Services | 7.17% |
| ICRA | 7.2% |
| Sunidhi Securities | 7.24% |
| DBS Bank | 7.25% |
| IndusInd Bank | 7.27% |
| YES Bank | 7.29% |
| Barclays | 7.3% |
| Bank of Baroda | 7.3% |
| CareEdge | 7.3% |
| Kotak Mahindra Bank | 7.35% |
| Elara Capital | 7.38% |
| Deutsche Bank | 7.4% |
| Standard Chartered Bank | 7.4% |
| State Bank of India | 7.41% |
| HDFC Bank | 7.42% |
| IDFC First Bank | 7.48% |
| Nomura | 7.5% |
| Motilal Oswal Financial Services | 7.5% |
The base effect will push up inflation in September to mark a third quarter in a row where it stays outside the tolerance band and confirm the failure of the Reserve Bank of India.
In the first three months of the year, the inflation rate was 6.3 percent. Average inflation for July-September will be 7 percent if a print of 7.3 percent in September is accurate.
Inflation will average 7 percent in the second half of the year, according to the latest forecast from the Reserve Bank of India.
In the event of failure, the central government will be given a report detailing the reasons for failure, as well as the time period in which inflation will return to target.
The Monetary Policy Committee would meet to discuss the Reserve Bank of India's reply to the government.
I don't know what we will write. We are expecting the inflation to come down close to the target over the next two years, that's what we have been expecting. There are a lot of uncertainties that are coming in from time to time.
The IIP is growing.
Industrial production data for August will be released at 6 pm today.
Industrial growth, as measured by the Index of Industrial Production (IIP), is seen falling to a six-month low of 1.7 percent in August from 2.4 percent in July, according to the median of estimates by 16 economists polled by Moneycontrol.| ORGANISATION | ESTIMATE FOR AUGUST IIP GROWTH |
| Deutsche Bank | 0.5% |
| YES Bank | 0.8% |
| DBS Bank | 1% |
| Standard Chartered Bank | 1% |
| HDFC Bank | 1.2% |
| Kotak Mahindra Bank | 1.6% |
| CareEdge | 1.7% |
| Nomura | 1.7% |
| Sunidhi Securities | 1.7% |
| Motilal Oswal Financial Services | 1.7% |
| State Bank of India | 1.8% |
| IndusInd Bank | 1.9% |
| ICRA | 2.8% |
| Bank of Baroda | 3.5% |
| Elara Capital | 4% |
| L&T Financial Services | 4.7% |
"Leading indicators saw mixed performance in August - while exports slipped into contraction zone and core sector growth slowed further to the lowest in nine months, auto production growth rose back to double digits on a year-on-year basis."
In August, India's core industries grew 3.3 percent, down from 4.5 percent in July.
The performance of core industries is key to industrial growth as they make up more than 40 percent of the IIP.
All Rights Reserved © 2024
