November Consumer Inflation Accelerates To 5.54%, Here's What Experts Say

November inflation was higher than 5.26 per centforecast in a Reuters poll of analysts.

November Consumer Inflation Accelerates To 5.54%, Here's What Experts Say
BENGALURU:

Retail inflation accelerated to 5.54 per cent in November due to high food prices, government data showed on Thursday.

November inflation was higher than 5.26 per cent forecast in a Reuters poll of analysts.

SUVODEEP RAKSHIT, SENIOR ECONOMIST, KOTAK INSTITUTIONAL EQUITIES, MUMBAI

"CPI inflation in November continued to be impacted by higher food inflation. This is primarily due to supply-led higher prices of vegetables and pulses."

"Core inflation at around 3.4 per cent remained benign implying that demand-led inflation remained low. Over the next few weeks, part of the food inflation will be favourably impacted as new supply of vegetables hits the market."

"However, this will be offset partially by higher telecom prices from December onwards. Overall, inflation is likely to remain above the 4% mark for most part of next year unless a drastic reduction in food prices is seen in December-January."

"Based on the Reserve Bank of India's (RBI's) Monetary Policy Committee (MPC) thought process on the latest policy response, and our expected evolution of the inflation trajectory, the MPC is unlikely to cut repo rate in the February policy and possibly in subsequent policies too."

RAHUL GUPTA, HEAD OF RESEARCH - CURRENCY, EMKAY GLOBAL FINANCIAL SERVICES, MUMBAI

"India's November inflation has surged to 40-month high of 5.54 per cent, that is a 130 basis points (bps) higher that RBI's medium term target of 4 per cent. This is mainly due to substantial increase in food prices. While Oct IIP print still remains in contraction at -3.8 per cent. At this month's policy, RBI refrained from cutting rates due to uptick in CPI despite slow growth. If inflation continues to rise further than RBI may continue to maintain a pause at the February policy."

PRITHVIRAJ SRINIVAS, CHIEF ECONOMIST, AXIS CAPITAL, MUMBAI

"Current trends indicate that CPI inflation will peak out at 5.8 per cent in January 2020 with inflation easing to 5.5 per cent by March 2020. However, we could be surprised by the speed of the decline given that the upturn has been mainly led by volatile vegetables."

"Once headline CPI begins to peak and shows a sustained trajectory towards 4 per cent, the central bank would be more willing to use up remaining rate cut space (we estimate 65 bps) to support growth. I believe that the (rate cut) pause will be temporary given that growth remains below potential."

"A fiscal stimulus that is designed to boost household confidence is needed now to address the demand slump and support leveraged consumption. Both the corporate tax cut already delivered and anticipated personal tax cut is likely to cost the government over 1 per cent of GDP. We expect the government to breach this year's fiscal deficit target by at least 0.5 per cent of GDP (i.e. 3.3 per cent to 3.8 per cent)."

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