India's retail inflation accelerated in September to a five-month high of 7.41% year-on-year as food prices surged, raising fears of further interest-rate hikes when the central bank meets for its next policy review in December.
The data shows retail inflation remaining above the Reserve Bank of India's target for three quarters, implying it will have to report to the government why it failed to meet the target and what actions it will need to take.
The MPC has raised rates by 190 basis points since May, and economists expect it to raise rates by at least 25 bps at its next meeting Dec. 5-7.Garima Kapoor, an economist at Elara Capital, said retail inflation was likely to ease to an average of 6% only by January-March. Food inflation, which accounts for nearly 40% of the CPI basket, rose 8.60% in September, compared to 7.62% in August.
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