October saw a decline in India's inflation rate for the third consecutive month, but authorities are still likely to be concerned about rising food prices in the run-up to elections.
According to statistics released on Monday by the statistics ministry, the consumer price index increased by 4.87 per cent from a year ago. This is a small increase over the predicted 5.02 per cent increase from September, according to a report published by Bloomberg.
The main cause of the slight slowdown was a decrease in core inflation brought on by lower costs for healthcare, household goods, and apparel. The report indicated that food costs, which account for over half of the consumer basket, continued to be high.
Governor of the Reserve Bank of India Shaktikanta Das forewarned last week about the possibility of shocks to food prices and said that decision-makers would be on guard.
“We expect the Monetary Policy Committee to maintain a hawkish tone,” with no change in interest rates and the policy stance at the next policy meeting, Aditi Nayar, chief economist of ICRA Ltd.,told Bloomberg via an email. According to her, inflation is expected to increase to 5.6 percent by December and stay between 4.9 percent and 5.6 percent in the following two quarters.
The Reserve Bank of India has maintained a moderately hawkish policy stance to contain price pressures, although it has now held interest rates steady for four consecutive meetings. The objective of the RBI is to maintain inflation at 4 per cent over time.
The Reserve Bank of India will only begin monetary policy easing when the Federal Reserve begins to reduce rates, due to the historically low policy rate differential between the two institutions.
