India’s retail price inflation likely eased slightly in February, helped by lower food prices, economists say in a Reuters poll who have consistently warned that soaring oil prices will push inflation much higher high in the coming months.
Following Russia’s invasion of Ukraine, crude oil prices skyrocketed – in March alone they jumped around 35% – which, in turn, will drive up fuel, transportation and other related components of inflation this month.
Inflation, as measured by the consumer price index (CPI), likely slipped to 5.93% in February on an annual basis, from 6.01% in January, the poll predicted from 3 to 9 March with 36 economists.
The forecast for the data, due out on March 14 at around 1200 GMT, ranged between 5.70% and 6.40%. More than a quarter of respondents expected inflation to remain above the RBI’s upper 6.0% threshold.
“I expect the headline moderation in February to be primarily driven by the food and beverage component, where adjusted monthly gains have eased from their recent highs,” said Miguel Chanco, chief economist for emerging Asia at Pantheon Macroeconomics.
“Thunderclouds have been brewing for some time…the best way to describe the inflation numbers from about the second quarter is that when it rains, it pours.”
Gasoline prices at filling stations, where Indians will feel the effect of rising crude oil prices the most, have barely budged but are expected to rise in the coming weeks.
“A sharp rise in prices after the election results are announced and its repercussion on transport costs would push inflation higher,” said Kunal Kundu, Indian economist at Societe Generale, referring to elections in five states. Indians over the past month, including the most populous. a, Uttar Pradesh.
Asia’s third-largest economy grew 5.4% in the October-December quarter, slower than the 6.0% predicted by economists in another Reuters poll.
Focusing on growth, not inflation, the Reserve Bank of India has kept interest rates at historic lows for nearly two years, but is expected to raise borrowing costs in the next quarter.
The latest survey also showed industrial production likely rose 1.5% in January from a year ago, down from 0.4% in December.