Inflation likely held below RBI's target at 3.5% again in August, finds survey

Indian consumer inflation is expected to remain below the Reserve Bank of India's 4.0% medium-term target for the second consecutive month in August, driven by a moderation in food price increases due to last year's high base, according to a Reuters poll. The survey of 53 economists forecast a 3.50% inflation rate for August, slightly down from July’s 5-year low of 3.54%.

Chief Economic Advisor at Union Bank of India, Ms. Kanika Pasricha, noted that while food prices have eased due to recent improvements in monsoon rains, erratic weather could affect crop yields and drive prices up in the coming months. Vegetable price increases slowed to 6.83% YoY in July, down from nearly 30% earlier in the year. Despite the current moderation, economists predict inflation will average 4.2% this quarter and rise to 4.5%-4.7% in the following quarters, potentially leading the RBI to delay rate cuts. Core inflation, excluding volatile items, is projected to be 3.30% for August. Additionally, wholesale price index-based inflation is expected to have eased to 1.85% from 2.04% in July.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.