India's Inflation Jumps, Pushing RBI Toward Hike
India's Inflation Jumps, Pushing RBI Toward Hike
The News
India's annual retail inflation accelerated to 4.82% in August from 4.45% in July, driven by higher food and fuel prices and strengthening the case for an interest rate hike in October, Reuters reported Monday.
It was the tenth straight month of acceleration, and the reading marginally exceeded forecasts, according to CNBC.
Bloomberg reported the jump pushes inflation closer to the top of the Reserve Bank of India's 2%-6% target range, narrowing the scope for policymakers to stay on hold for long.
The Numbers
Retail inflation: 4.82% year-on-year in August, up from 4.45% in July.
Wholesale prices: up 9.92% year-on-year in August, per Reuters.
RBI target band: 2% to 6%.
Timeline
India's annual retail inflation runs at 4.45%.
Retail inflation climbs to 4.82% on higher food and fuel prices, the tenth consecutive monthly acceleration. Wholesale prices rise 9.92% from a year earlier.
The August retail and wholesale inflation figures are published, coming in marginally above forecasts.
Reactions
Economists quoted by Reuters said the acceleration strengthens the case for the Reserve Bank of India to raise interest rates in October rather than hold.
Bloomberg framed the print as narrowing the central bank's room to pause, with price growth closing in on the 6% ceiling of its tolerance band.
CNBC noted the figure came in slightly above what forecasters had expected.
What's Next
Attention turns to the Reserve Bank of India's next policy decision, with analysts pointing to October as the likely moment for a rate move.
The next monthly retail inflation reading will show whether the ten-month run of acceleration continues or breaks.
More
Wholesale price growth of 9.92% is running far hotter than the retail number, a gap that typically signals more cost pressure still working its way through to consumers.
India is the world's most populous country and one of the largest buyers of imported energy, so its food and fuel bill moves with global commodity markets that also set prices for American consumers.
Poll
Should the Reserve Bank of India raise rates in October?
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