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India's retail inflation is projected to surge to 6.15% in October, exceeding the Reserve Bank of India's (RBI) tolerance threshold of 6%, according to a new report by Union Bank of India. The spike is attributed to persistent <keyword id="21013592" type="General" weightage="20" keywordseo="food-price-pressures" source="keywords">food price pressures</keyword> and the waning of favorable base effects from the previous year. Earlier this month, RBI governor Shaktikanta Das also echoed similar sentiments and noted that the inflation print for October 2024 could stay well above 5.5%. This is why, as Das highlighted, cutting interest rates as early as December would be very early and premature The <keyword id="19999655" type="General" weightage="20" keywordseo="Consumer-Price-Index" source="keywords">Consumer Price Index</keyword> (CPI) data for October, which will be released at 4 pm on Tuesday, as opposed to the previous practice of releasing this data at 5:30 pm on the 12th of every month, follows September's inflation reading of 5.49%, up from 3.65% in August 2024. The last time inflation breached the RBI's upper limit was in August 2023. Despite the RBI's anticipation of an October inflation "hump," the Union Bank report suggests that the magnitude of the increase might raise concerns, particularly as November's figures are also tracking at elevated levels. The bank maintains its forecast of unchanged interest rates in December's monetary policy meeting, with a modest 50 basis points rate cut cycle predicted to begin in February 2025. Food inflation remains a key driver of price pressures, with vegetables and edible oils leading the recent surge. In September 2024, India's YoY food inflation rate hit 9.24%, up from 5.66% in the month prior. However, the report projects some easing of food inflation in the January-March quarter, citing typical winter price moderation and improving prospects for rabi crops. Despite this, potential risks from food supply disruptions, imported edible oil prices, and the impact of potential trade tariff hikes will exist. The RBI, which aims to maintain retail inflation at 4%, has held the repo rate steady at 6.5% for the tenth consecutive time in its last meeting as part of its inflation containment strategy. A recent SBI report also noted that expecting rate cuts in this quarter would be immature, and easing was possible only during the first half of 2025. "Given the current estimates of FY25 real GDP growth at 7.2% and CPI at 4.50%, the RBI would quite possibly keep policy rates stable over the coming quarter at least. Emerging trends in the growth outlook would possibly determine the timing and extent of any policy easing. With near-term CPI numbers likely to stay elevated, it’s premature to consider expectations of any easing in the December review. "However, high-frequency data do validate a softness in growth data on an incremental basis. Given the anticipated aligning of CPI closer to the target over H2, a shallow easing, if any can be a reasonable possibility over H1 of CY 25", it added.

Retail inflation expected to breach 6% mark in October, says UBI Report

Mumbai: The rupee slipped 1 paisa to an all-time low of 84.40 against the US dollar in early trade on Wednesday, as persistent <keyword id="20520117" type="General" weightage="20" keywordseo="foreign-fund-outflows" source="keywords">foreign fund outflows</keyword> and a muted trend in domestic equities weighed on the local unit. Forex traders said the USDINR pair has shown significant volatility in recent sessions, with the rupee inching closer to its all-time low of 84.40. This downward pressure is largely driven by global factors, particularly the Dollar Index's strengthening. At the interbank foreign exchange, the rupee opened at 84.40 against the greenback, registering a fall of 1 paisa over its previous close. On Tuesday, the rupee fell 1 paisa to a new lifetime low of 84.39 against the US dollar. "It appears that the rupee has established support around the current levels, with depreciation limited near 84.50," CR Forex Advisors MD Amit Pabari said. Pabari further added that the RBI stands tall as the depreciation in the rupee seems to be limited as the <keyword id="19899810" type="General" weightage="100" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (RBI) continues to sell the dollars to protect the sharp depreciation. "For the 5th consecutive week, India's forex reserves declined, possibly due to RBI selling the dollars. Currently, the forex reserves of India stand at USD 682 billion down from the recent all-time high of USD 704 billion," he said. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.04 per cent at 105.98. Brent crude, the global oil benchmark, rose 0.25 per cent to USD 72.07 per barrel in futures trade. On the domestic equity market front, Sensex was trading 210.66 points, or 0.27 per cent lower, to 78,464.52 points. The Nifty fell 100.45 points, or 0.42 per cent, to 23,783.00 points. Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday, as they offloaded shares worth Rs 3,024.31 crore, according to exchange data. On the macroeconomic front, retail inflation breached the Reserve Bank's upper tolerance level, soaring to a 14-month high of 6.21 per cent in October mainly on account of rising food prices. Inflation based on the consumer price index (CPI) was 5.49 per cent in September and 4.87 per cent in the year-ago month. India's industrial production expanded by 3.1 per cent in September after recording a contraction in the preceding month, as all three major segments -- mining, manufacturing, and power generation -- showed improvement. However, the growth in the Index of Industrial Production (IIP) during the month was lower than 6.4 per cent registered in September 2023.

Rupee falls 1 paisa to all-time low of 84.40 against US dollar in early trade

New Delhi: While the <keyword id="20199673" type="General" weightage="20" keywordseo="moderation" source="keywords">moderation</keyword> in <keyword id="20468215" type="General" weightage="20" keywordseo="CPI" source="keywords">CPI</keyword> <keyword id="19895000" type="General" weightage="100" keywordseo="inflation" source="keywords">inflation</keyword> is a welcome development, experts caution that the road ahead could be bumpy. The sequential momentum in <keyword id="19960157" type="General" weightage="20" keywordseo="food-prices" source="keywords">food prices</keyword> remains strong, with a 2.5 per cent month-on-month increase in prices, higher than the average sequential growth, indicating that inflationary pressures may persist. The uneven distribution of monsoon rainfall and the potential for excess rainfall in the coming months pose additional risks to food prices. RajSinha, Chief Economist at CareEdge, noted, "Despite the moderation in the inflation of the food and beverage basket when compared to last year, the sequential momentum remains strong, with a 2.5 per cent M-o-M increase in prices, higher than an average sequential grow." Dharmakirti Joshi, Chief Economist at CRISIL, highlighted the impact of the high-base effect, stating, While the high-base effect -- along with sequential monthly movements -- was supportive of food inflation, it had an adverse bearing on core inflation. The big worry now is food prices continue to be elevated with the on-month rise slightly higher than usual for July. "The good part is monsoon and sowing have been progressing well and the expectation is that the arrival of fresh supplies in the market should over the next few months curb the food price rise. Overall, though, we expect inflation to ease and average 4.5 per cent this fiscal mostly due to softer food prices. This should allow the <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> to begin cutting earliest by October", Joshi added. Raghvendra Nath, Managing Director of Ladderup Wealth Management, expressed optimism regarding the CPI data, stating, "This decline is primarily attributed to a reduction in the Consumer Food Price Index, which fell from 9.36 per cent in June to 5.42 per cent in July. This improvement should offer reassurance to the <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (RBI), which has indicated that <keyword id="19920341" type="General" weightage="20" keywordseo="rate-cuts" source="keywords">rate cuts</keyword> will occur only when inflation sustainably aligns with its 4 per cent target. He added, "Positive expectations for the monsoon and adequate buffer stocks support the continued downward trend of CPI. However, any substantial rise in crude oil prices due to the ongoing geopolitical crisis could adversely affect inflation and the broader economy." Sanjeev Agrawal, President of the PHD Chamber of Commerce and Industry, also commended the decline in CPI inflation, stating, "It is highly appreciable that the CPI inflation has exhibited a decline in the year-on-year inflation rate at 3.5 per cent for the month of July 2024 from 5.08 per cent in June 2024." He added, "The food and beverages inflation eased sharply from 8.4 per cent in June 2024 to 5.06 per cent in July 2024 and fuel and light inflation from -3.7 per cent in June 2024 to -5.4 per cent in July 2024, are the main drivers of the softening inflation trajectory." India's Consumer Price Index (CPI) inflation eased significantly to 3.54 per cent in July 2024, marking its lowest level in nearly five years and a sharp drop from 5.08 per cent in June. This decline, which brought inflation below the Reserve Bank of India's (RBI) medium-term target of 4 per cent for the first time since 2019, has been largely attributed to a favourable base effect and a dramatic reduction in <keyword id="20621131" type="General" weightage="20" keywordseo="vegetable-prices" source="keywords">vegetable prices</keyword>. The primary driver behind this sharp moderation was the steep fall in vegetable inflation, which plummeted from 29.3 per cent in June to 6.8 per cent in July. The Consumer Food Price Index (CFPI) also saw a significant reduction, falling from 9.36 per cent in June to 5.42 per cent in July, contributing to the overall easing of CPI inflation. (ANI)

Experts welcome moderation of inflation in July, by warns of continued inflationary pressure ahead

New Delhi: The ongoing volatility in the prices of key food items such as tomatoes, onions, and potatoes (collectively known as TOP) and pulses continues to pose significant challenges for the <keyword id="19913109" type="General" weightage="20" keywordseo="monetary-policy-committee" source="keywords">Monetary Policy Committee</keyword> (MPC) of the <keyword id="19899810" type="General" weightage="20" keywordseo="reserve-bank-of-india" source="keywords">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="100" keywordseo="RBI" source="keywords">RBI</keyword>), highlights a report by <keyword id="19898108" type="General" weightage="20" keywordseo="SBI" source="keywords">SBI</keyword>. "Current volatility in prices of TOP and pulses continues to challenge the MPC, keeping the headline above target at 5.1 per cent in June 2024," said the report. The report highlighted that this instability in <keyword id="19960157" type="General" weightage="20" keywordseo="food-prices" source="keywords">food prices</keyword> has kept the headline Consumer Price Index (CPI) <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword> above the targeted level, reaching 5.1 per cent in June 2024. While the inflationary pressures remain a concern, the report stated that there is hope on the horizon due to the currently above-normal <keyword id="19968257" type="General" weightage="20" keywordseo="monsoon" source="keywords">monsoon</keyword> and increased sowing activity, which are further supported by the potential onset of a La Nina event later in the year. "The currently above-normal monsoon and sowing, backed up by a potential La Nina event later, promise reprieve in later quarters," said the report. Importantly, the report added that it is now expected that the CPI will remain above the RBI's medium-term target of 4 per cent in all quarters up until the first quarter of FY26. This persistent overshoot highlights the ongoing inflationary pressures in the economy. "Notably, now the CPI is expected to be above RBI's target of 4 per cent in all quarters till Q1FY26," the report added. However, the report noted that the Monetary Policy Committee expects a moderation in inflation during the fourth quarter, which is anticipated to help keep the overall CPI projection for FY24 unchanged at 4.5 per cent. The SBI report also believes that the volatility in food prices, driven by uneven spatial and temporal distribution of monsoon rains, presents an upside risk to the current inflation projections. As a result, SBI maintains its CPI estimate for FY25 at 4.7 per cent year-on-year. In the latest MPC meeting on Wednesday, RBI Governor <keyword id="19913110" type="General" weightage="20" keywordseo="shaktikanta-das" source="keywords">Shaktikanta Das</keyword> said inflation will moderate from July onwards as the monsoon has improved and global food prices have shown signs of easing in July. Das said, "Global food prices showed signs of easing in the month of July after registering an increase since March 2024." A degree of relief in food inflation is expected from the pickup in southwest monsoon and healthy progress in Kharif sowing. Buffer stocks of cereals continue to be above the norms, according to RBI Governor Shaktikanta Das. Das added, "Assuming a normal monsoon and taking into account the 4.9 per cent inflation print, Q1 CPI inflation for the current financial year (2024-25) is projected at 4.5 per cent, with q2 at 4.4 per cent, Q3 at 4.7 per cent and Q4 at 4.3 per cent. CPI inflation for the first quarter of next financial year (Q1 2025-26) is projected at 4.4 per cent."

High food prices raise concerns but improved monsoon offers hope for RBI: SBI report

Three years after rival <keyword id="19901323" type="General" weightage="20" keywordseo="Zomato" source="keywords" meta.keywordsubtype="org" meta.entityname="Zomato" meta.hostid="261" meta.entityid="Zomato">Zomato</keyword> went public, raising Rs 9,375 crores, food and grocery delivery behemoth Swiggy is set to open for subscription on the Indian bourses between November 6th and 8th, 2024. Looking to raise Rs 11,327.43 crore from the markets, Swiggy has set a price band of Rs 371 to Rs 390 per share. The company is targeting a valuation of $11.3 billion, around 25% down from its initial target of $15 billion. The issue comprises Rs 4,499 crore worth of fresh issue, with the remaining Rs 6,828.43 crore coming via <keyword id="19951016" type="General" weightage="20" keywordseo="OFS" source="keywords">OFS</keyword> (offer for sale), with stakeholders like <keyword id="20294899" type="General" weightage="20" keywordseo="Prosus" source="keywords" meta.keywordsubtype="org" meta.entityname="Prosus" meta.hostid="261" meta.entityid="Prosus">Prosus</keyword> offloading about 5.2% of their stakes, which could translate into proceeds worth $510 million. The offer will conclude on November 8, and listing is tentatively scheduled for November 13, 2024. Other stakeholders who will be participating in the OFS at the present valuation include <keyword id="20064356" type="General" weightage="20" keywordseo="Accel" source="keywords" meta.keywordsubtype="org" meta.entityname="Accel" meta.hostid="261" meta.entityid="Accel">Accel</keyword>, which will sell around $60 million worth of their stake. Elevation Capital and Tencent's stake sale could earn them up to $30-35 million each. Swiggy's CEO <keyword id="20304807" type="General" weightage="20" keywordseo="Sriharsha-Majety" source="keywords">Sriharsha Majety</keyword> and co-founder Nandan Reddy are also expected to offload their shares. Currently, they hold 6.23% and 1.76% stakes in the company, respectively. The sale of around 0.1% stake by each is expected to earn them about $14 million in total. Notably, the company does not have any identifiable promoters, as per SEBI ICDR Regulations and the Companies Act 2013. From funds raised via IPO, the company plans to allot Rs 1,648 million for repaying borrowings made by its subsidiary, Scootsy. The app, which operated independently of Swiggy, offered <keyword id="20299302" type="General" weightage="20" keywordseo="food-delivery" source="keywords">food delivery</keyword> services from a selected list of high-end bakeries and restaurants in the city. Notably, Swiggy had acquired Scootsy in 2018 at a reported valuation of Rs 50 crore. However, Swiggy's foray into the premium-food delivery segment did not pan out well, and the company decided to shut Scootsy in 2020. However, per the company's RHP (red herring prospectus), Swiggy is planning to reinvest and revive Scootsy for extending their dark store network and making lease/license payments for the same. About Rs 11,787 million would be utilised for expanding Swiggy's dark store network for its quick commerce wing, <keyword id="20255906" type="General" weightage="20" keywordseo="Instamart" source="keywords">Instamart</keyword>. Swiggy has also allocated Rs 11,153 million for enhancing the brand's visibility and outreach. <h2>Negative cash flows from operations</h2>The company has only incurred net losses since its inception in 2014. However, the company's annual losses as a percentage of its revenue from operations has come down in the recent years. From 63.61% in 2022 to 20.90% in 2024, the losses as part of its revenue from operations further narrowed to 18.96% for the quarter ended June 30, 2024. Moreover, Scootsy is yet to receive requisite registrations and approvals for each of the dark store it intends to set up. It does not help that Scootsy has not run into greens over the past 2-3 years. The subsidiary had incurred losses worth Rs 2,953.5 million, which have burgeoned to Rs 4,239.72 million in FY24. Swiggy also lags behind its rival Zomato in terms of monthly transacting users (MTU), along with many other key financial and operational metrics. Zomato has a wider, pan-India presence, commanding a 57% <keyword id="20038792" type="General" weightage="20" keywordseo="market-share" source="keywords">market share</keyword> in FY24. Compared to this, Swiggy's market share stood at 43% during the same period. As of FY24, Swiggy's MTUs, at 12.7 million, are about 31% lower than Zomato's MTU of 18.4 million.

Swiggy sets IPO price band between Rs 371-390/share; offer likely to open on November 6th. Here's all you need to know

Mumbai (Maharashtra) [India], August 8 (ANI): <keyword id="64190" type="General" weightage="100" keywordseo="RBI-Governor" source="Orion">RBI Governor</keyword> <keyword id="6359111" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="Orion">Shaktikanta Das</keyword> says <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword> will moderate from July onwards as the monsoon has improved and <keyword id="489239" type="General" weightage="20" keywordseo="Global-food-prices" source="Orion">global food prices</keyword> have shown signs of easing in July. Das said, "Global food prices showed signs of easing in the month of July after registering an increase since March 2024." A degree of relief in food inflation is expected from the pickup in southwest monsoon and healthy progress in Kharif sowing. Buffer stocks of cereals continue to be above the norms, according to RBI Governor Shaktikanta Das. Das added, "Assuming a normal monsoon and taking into account the 4.9 per cent inflation print, Q1 CPI inflation for the current financial year (2024-25) is projected at 4.5 per cent, with q2 at 4.4 per cent, Q3 at 4.7 per cent and Q4 at 4.3 per cent. CPI inflation for the first quarter of next financial year (Q1 2025-26) is projected at 4.4 per cent." The inflation landscape reflects mixed signals, to which Das said, "<keyword id="21258540" type="General" weightage="20" keywordseo="headline-inflation" source="keywords">Headline inflation</keyword> eased up to 5.1 per cent in June 2024 due to higher than expected food inflation. Fuel remained in deflation for the 10th consecutive month. Core inflation moderated to a historic low in the months of May and June." RBI Governor Shaktikanta Das, outlined the <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword> with real <keyword id="19972825" type="General" weightage="20" keywordseo="GDP-growth" source="keywords">GDP growth</keyword> of 7.2 per cent for the fiscal year 2024-25 and headline inflation eased to 5.1 per cent in June, on Thursday. Das said, "Real GDP growth for 2024-25 is projected at 7.2 per cent with Q1 at 7.1 per cent, Q2 at 7.2 per cent, Q3 at 7.3 per cent and Q4 at 7.2 per cent. Real GDP growth for Q1 2025-26, this is something which we are giving for the first time, is projected at 7.2 per cent. The risks are evenly balanced." He added, "We have slightly moderated the <keyword id="387719" type="General" weightage="20" keywordseo="growth-projection" source="Orion">growth projection</keyword> for the first quarter of the current financial year in relation to the projection we gave in the previous MPC in June. This is primarily due to updated information on certain high-frequency indicators which show lower than anticipated corporate profitability, general government expenditure and core industries output." This forecast marks a slight moderation from previous estimates provided in the Monetary Policy Committee (MPC) meeting in June, attributed to recent updates on high-frequency indicators such as corporate profitability, general government expenditure, and core industries output. The inflation landscape reflects mixed signals, to which Das said, "Headline inflation eased up to 5.1 per cent in June 2024 due to higher than expected food inflation. Fuel remained in deflation for the 10th consecutive month. Core inflation moderated to a historic low in the months of May and June." Balancing robust growth projections with a nuanced understanding of inflation dynamics Governor Das stated, "Food inflation which has a weight of around 46 per cent in the CPI basket, contributed to more than 75 per cent of headline inflation in May and June. Vegetable prices increased sharply and contributed about 35 per cent to inflation in June. High inflation pressures persisted across other major food items also." Governor Das mentioned softening in core inflation continues to be broad-based with core services inflation touching a new low in the current CPI series during the month of May and June 2024. Das stated, "The high food price momentum likely to have continued in the month of July also. Large favourable base effects may however push headline inflation downwards in July. The Impact of the revision in milk prices mobile tariffs also needs to be carefully monitored." A degree of relief in food inflation is expected from the pickup in south west monsoon and healthy progress in Kharif sowing. Buffer stocks of cereals continue to be above the norms, according to RBI Governor Shaktikanta das. Das anticipates some relief in food inflation due to the expected pickup in the southwest monsoon and healthy progress in Kharif sowing. Buffer stocks of cereals remain above the normative levels, contributing to a more stable food price environment. Global food prices, which have been on an upward trajectory since March 2024, showed signs of easing in July.

RBI Governor Shaktikanta Das projects 7.2% GDP growth for 2024-25, reports eased inflation to 5.1% in June

In April, the <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) governor Shaktikanta Das referred to <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword> as the ‘elephant in the room’. He said, “The elephant has now gone out for a walk and appears to be returning to the forest. We would like the elephant to return to the forest and remain there on a durable basis… Elephant moves slowly, and last mile inflation tends to be sticky.” On Friday, the Indian government data showed that the year-on-year inflation rate based on the Consumer Price Index (<keyword id="20468215" type="General" weightage="20" keywordseo="CPI" source="keywords">CPI</keyword>) for June 2024 stood at 5.08 per cent — rising from 4.75% last month. This was the first time the headline inflation had risen since December 2023! Looks like the elephant decided to stop and look back on its way to the forest. The question remains, what’s next — will it return to the forest or return to the room to haunt us again? <h2>Food price inflation at a record high</h2> The major driver for the higher inflation figures this month has been the rising <keyword id="19960157" type="General" weightage="20" keywordseo="food-prices" source="keywords">food prices</keyword> across India. In fact, food price inflation almost doubled year-on-year in June, rising to 8.36 per cent last month compared to 4.63 per cent in June 2023. Inflation in the food basket was 9.36 per cent in June, up from 8.69 per cent in May, according to the data of the National Statistical Office (NSO). Government data showed that <keyword id="513422" type="General" weightage="20" keywordseo="retail-inflation" source="Orion">retail inflation</keyword> for all food segments, including cereal, meat, eggs, milk, oils, fruits, vegetables, pulses, sugar, spices, prepared snacks, and sweets, increased month-on-month. This was the main cause for retail inflation hardening in June, diverging from the previous months' moderation. While the inflation rate based on the all-India CPI for June 2024 stood at 5.08%, rural and urban inflation rates also spiked to 5.66 per cent and 4.39 per cent, respectively. “Barring the food basket, inflation is indicating signs of bottoming out broadly across the non-food categories, also seen in the inflation in the core categories averaging at 3.5% in the last six months. A stable monsoon will play an important role in stabilising food prices and inflation levels over the next few months,” said Vivek Rathi, National Director Research, Knight Frank India. In May, annual retail inflation was at a 12-month low of 4.75%, slightly down from April's 4.83%. In December last year, retail inflation stood at 5.7 % and had been moderating until June. On the other hand, the US CPI rose only 3% on an annual basis in June versus expectations of 3.2%. Month-over-month, the US CPI declined 0.1%, on expectations for a 0.1% rise. <h2>There goes the chance of an early rate cut?</h2> While European central banks started to cut interest rates last month, hopes of such policy moves seem to have been derailed by these inflation figures. Indian central bank, RBI, has remained cautiously focused on inflation as the growth prospects remained robust. It has been waiting for the final phase of disinflation to materialise before considering rate cuts. The situation, however, does seem rather peculiar — as long as inflation does not align with the central bank's 4% target, the interest rates may remain rather high. However, the current economic environment is not gloomy at all, characterized by a robust GDP growth rate, estimated at 8.2% for 2023-24. Hence, the RBI adopts a wait-and-see approach. And the wait is likely to continue a little while longer. This year, food prices have become a significant issue for policymakers in India, and the RBI governor pinned his hopes on a good monsoon season to alleviate the food price inflation concerns. So far, the monsoon has stood up to our expectations, yet the food prices have remained stubbornly high, mainly due to extended heat wave conditions in June. "The CPI inflation came marginally higher than our expectations. While the <keyword id="67286" type="General" weightage="100" keywordseo="food-inflation" source="Orion">food inflation</keyword> risks will continue to dominate in the near term, we expect better sowing patterns and spatial distribution of rains to eventually ease the price pressures beyond these volatile months. Having said that, the central bank will be in no hurry to ease <keyword id="20104157" type="General" weightage="20" keywordseo="monetary-policy" source="keywords">monetary policy</keyword> given the headroom from robust growth in the backdrop of near-term inflation risks," said Upasna Bhardwaj, Chief Economist at Kotak Mahindra Bank. India's retail inflation remains within the Reserve Bank of India's (RBI) comfort range of 2-6% but exceeds the ideal 4% scenario. While inflation is a global concern, India has so far managed its inflation trajectory relatively well. Since May 2022, the RBI has raised the repo rate by 250 basis points cumulatively to combat inflation. However, over the last eight policy cycles, the central bank has kept the rates consistent at 6.5%. The next monetary policy meeting of the RBI is scheduled for early August. And with the higher-than-expected inflation data, the central bank is likely to keep the rate unchanged next month as well for the ninth consecutive month. However, hopes are still alive for a rate cut towards the end of the year. "We are not ruling out a stance change in October 2024 and a 25 bps rate cut each in December 2024 and February 2025, followed by an extended pause, if the food inflation outlook turns decidedly favourable on the back of a normal magnitude and favourable distribution of rainfall in the rest of the monsoon season, and there are no other shocks, either global or domestic," said Aditi Nayar, Chief Economist at ICRA. (With inputs from ANI and PTI) <div type="Article" hostid="261" msid="110784179" title="Monetary Policy Committee keeps repo rate unchanged at 6.5%, confirms RBI governor Shaktikanta Das" mstype="2" mssubtype="0"><payload><![CDATA[seealso]]></payload></div> <div type="Article" hostid="261" msid="110788776" title="RBI retains inflation projection for FY25 at 4.5%" mstype="2" mssubtype="0"><payload><![CDATA[seealso]]></payload></div>

Inflation spikes in June 2024 due to high food prices; Likely to affect RBI’s decision on interest rate

<ul><li>The <keyword id="19899810" type="General" weightage="20" keywordseo="Reserve-Bank-of-India" source="keywords" meta.keywordsubtype="org" meta.entityname="Reserve Bank of India" meta.hostid="261" meta.entityid="Reserve Bank of India">Reserve Bank of India</keyword> will conclude the three-day <keyword id="19913109" type="General" weightage="20" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword> (<keyword id="19918491" type="General" weightage="20" keywordseo="MPC" source="keywords">MPC</keyword>) meeting today.</li><li>The central bank is expected to announce its decision on policy rates.</li><li>The <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> has maintained the <keyword id="20094323" type="General" weightage="100" keywordseo="repo-rate" source="keywords">repo rate</keyword> at 6.50% for the past nine meetings.</li></ul>The Reserve Bank of India (RBI) is set to conclude the three-day Monetary Policy Committee (MPC) meeting today, with Governor <keyword id="19913110" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="keywords">Shaktikanta Das</keyword> expected to announce the central bank's decision on policy rates. The meeting, which <a href="https://www.businessinsider.in/finance/news/rbis-monetary-policy-committee-meeting-begins-today-announcement-on-october-9/articleshow/113999887.cms">began</a> on October 7, has garnered significant attention, as the RBI has maintained the repo rate at 6.50% for the past nine meetings. The repo rate has remained steady since the RBI adopted a cautious stance to balance inflation control and <keyword id="19900794" type="General" weightage="20" keywordseo="economic-growth" source="keywords">economic growth</keyword>. Key factors that the MPC is weighing include persistent inflationary pressures, particularly in food prices, as well as global economic uncertainties. According to data from the Ministry of Statistics &amp; Programme Implementation, while All India Consumer Price Index (CPI) inflation moderated to 3.65% in August--within the RBI's target band of 2-6%. <keyword id="19999654" type="General" weightage="20" keywordseo="food-inflation" source="keywords">Food inflation</keyword> remains elevated at 5.65%, above the central bank's medium-term target of 4%. This, coupled with rising global crude oil prices due to geopolitical tensions in West Asia, has intensified concerns over inflation. Despite these challenges, the RBI has so far opted for a status quo on the repo rate, aiming to foster economic recovery after the pandemic. However, today's announcement will be closely watched to see if the central bank shifts its stance, especially given the external pressures and uncertainties surrounding global markets. Economists, however, have noted that the RBI will not make any changes in its policy stance before December. "With the focus on taming headline inflation, the RBI is likely to hold the rates although the core inflation is within the limit. It is possible the RBI may shift to the neutral stand" said M Govind Rao, Member, of the Fourteenth Finance Commission and former Director, of the National Institute of Public Finance and Policy. On September 18, the US Federal Reserve announced a steep 50 basis points interest cut in its review meeting. US Fed announced the rate cuts after holding interest rates steady for eight straight meetings. "In this overarching macroeconomic setting of heightened geopolitical tensions, core inflation inching upwards, oil price volatility, and high food inflation, we anticipate a change in the RBI's policy stance from "withdrawal of accommodation" to "neutral" at its forthcoming MPC meeting on October 9, 2024. However, we do not see any rate action coming and the benchmark interest rates may not undergo any change" said Manoranjan Sharma, Chief Economist, Infomerics Ratings. Earlier this month the central government appointed three new members to the monetary policy committee. The MPC comprises three members from the RBI and three external members appointed by the Central Government. With inputs from ANI. SEE ALSO: <a href="https://www.businessinsider.in/business/auto/news/byd-emax-7-electric-mpv-launched-in-india-starting-at-26-9-lakh/slidelist/114046121.cms">BYD eMax 7 electric MPV launched in India starting at ₹26.9 lakh</a> <a href="https://www.businessinsider.in/personal-finance/news/heres-how-a-reddit-user-was-able-to-get-an-iphone-16-at-under-27000/articleshow/114035179.cms">Here’s how a Reddit user was able to get an iPhone 16 at under ₹27,000</a> <a href="https://www.businessinsider.in/stock-market/news/hyundai-swiggy-ather-upcoming-large-ipos-in-india/slidelist/114014140.cms">Hyundai To Swiggy: Everyone wants to cash in on the IPO bonanza</a>

RBI MPC announcement today: Rates unlikely to change, RBI may change stance to neutral

In line with the moderation in <keyword id="513422" type="General" weightage="20" keywordseo="retail-inflation" source="Orion">retail inflation</keyword>, wholesale <keyword id="158363" type="General" weightage="100" keywordseo="inflation-in-india" source="Orion">inflation in India</keyword> too witnessed a sharp decline in July. The annual rate of <keyword id="19895000" type="General" weightage="20" keywordseo="inflation" source="keywords">inflation</keyword> based on all India <keyword id="59350" type="General" weightage="20" keywordseo="Wholesale-Price-Index" source="Orion">Wholesale Price Index</keyword> (WPI) number is 2.04 per cent (provisional) for the month of July, 2024 (over July 2023). It continues to remain in the positive territory for the ninth month after remaining in the negative zone for seven months until October. Economists often say a little rise in <keyword id="280418" type="General" weightage="20" keywordseo="wholesale-inflation" source="Orion">wholesale inflation</keyword> is good as it typically incentivises goods manufacturers to produce more. For food index, which has 24.38 per cent weightage, the rate of wholesale inflation decreased from 8.68 per cent in June, 2024 to 3.55 per cent in July. The increase last month was largely due to higher prices in various categories including food articles, manufacture of food products, crude petroleum and natural gas, mineral oils, and other manufacturing sectors. The government releases index numbers of <keyword id="116267" type="General" weightage="20" keywordseo="wholesale-prices" source="Orion">wholesale prices</keyword> on a monthly basis on the 14th of every month (or the next working day). The index numbers are compiled with data received from institutional sources and selected manufacturing units across the country. In April last year, the wholesale inflation went into negative territory. Similarly, in the initial days of COVID-19, in July 2020, the WPI was reported negative. Overall wholesale inflation was 8.39 per cent in October 2022 and has fallen since then. Notably, the wholesale price index (WPI)--based inflation had been in double digits for 18 months in a row till September 2022. Meanwhile, India's retail inflation, after breaching 5 per cent in June, softened drastically in July. According to data released by the Ministry of Statistics and Programme Implementation, retail inflation or Consumer Price Index in July was at 3.54 per cent, which is the lowest in the last 59 months. In June, taking a departure from the moderation it witnessed in the past months, it rose to 5.08 per cent, pushed by rising food prices. Food inflation for July 2024 is the lowest since June 2023. Year-on-year inflation rate based on All India Consumer Food Price Index (CFPI) number is 5.42 per cent (Provisional) for the month of July, 2024. The corresponding inflation rate for rural and urban is 5.89 per cent and 4.63 per cent, respectively. Rising food prices continued to be a headache for Indian consumers with the inflation rate in the food segment almost doubling year-on-year in June. Food prices continue to remain a pain point for the policymakers in India, who wish to bring retail inflation to 4 per cent on a sustainable basis. However the latest retail inflation data showed the overall inflation has aligned with the intended target. Inflation has been a concern for many countries, including advanced economies, but India has largely managed to steer its inflation trajectory quite well. The eased month-on-month retail inflation, barring June, came on the heels of RBI having maintained the status quo in the repo rate for the ninth straight occasion. Barring the recent pauses, the RBI has raised the repo rate by 250 basis points cumulatively since May 2022 in the fight against inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline. The repo rate is the rate of interest at which the RBI lends to other banks.

Amid declining retail inflation, wholesale inflation in India moderates to 2.04% in July

The Reserve Bank is unlikely to ease the benchmark policy rate from 6.5% during 2024, given the persisting uncertainty over <keyword id="19999654" type="General" weightage="20" keywordseo="food-inflation" source="keywords">food inflation</keyword>, State Bank of India (<keyword id="19898108" type="General" weightage="20" keywordseo="SBI" source="keywords">SBI</keyword>) chairman C S Setty has recently said. The US Federal Reserve's first cut in <keyword id="20071327" type="General" weightage="20" keywordseo="interest-rate" source="keywords">interest rate</keyword>s in more than four years happened today, triggering central banks in other economies to follow suit. The Fed trimmed the interest rates by 50 basis point trim to its target interest rate range to 4.75-5%. "On the rate front, a lot of central banks are taking independent calls. While Fed rate cut would influence everyone, <keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword> would be mindful of the food inflation before taking a call on interest rate cut," Setty, who recently took over the reins of the bank, was noted as saying. "Our view is also that the rate cut during the current calendar year may not happen. Probably, we may have to wait for Q4 (January-March 2025) unless there is a good improvement in terms of food inflation," he added. Notably, RBIs <keyword id="19913109" type="General" weightage="100" keywordseo="Monetary-Policy-Committee" source="keywords">Monetary Policy Committee</keyword> (MPC), headed by RBI Governor Shaktikanta Das is scheduled to meet next month, between October 7-9 and take a call on interest rate. The committee will largely take <keyword id="19999652" type="General" weightage="20" keywordseo="retail-inflation" source="keywords">retail inflation</keyword>, which inched to 3.65% in August, up from 3.54% in July, into account for making rate-related decisions On the other hand, India's wholesale price index (WPI) eased to 1.31% on an annual basis, which is also a 4-month low, down from 2.04% in July. The data, released recently by the government, also highlighted the stickiness of food price inflation, which stood largely undeterred at 3.11% in August, as compared to 3.45% in July. Although WPI rates do not directly impact RBIs decision making, it does affect the retail inflation rates, although it takes time to reflect the same. Says Rahul Agrawal, Senior Economist at ICRA Ltd, “The <keyword id="20198768" type="General" weightage="20" keywordseo="WPI-inflation" source="keywords">WPI inflation</keyword> eased to a four-month low in August 2024, with the fuel and power, core (non-food manufacturing), and crude petroleum and natural gas sub-groups together pulling down the headline WPI print by as much as 70 bps in the month vis-à-vis July 2024. The core WPI inflation dipped to 0.7% in August 2024 from 1.2% in July 2024, amidst a continued softening in global commodity prices. "While prices of most food items have eased further on a month-on-month basis in September 2024, an adverse base would push up the YoY inflation prints for the primary food articles category significantly in the ongoing month, exerting upward pressure to the headline WPI inflation print for September 2024", said Agrawal. The price of the Indian basket of crude oil has averaged 6.0% lower in September 2024 on a sequential basis, touching the lowest levels in 33 months, which would also help contain the uptick in the headline WPI inflation print in the month. We anticipate WPI to touch the 2.0% in September 2024 from 1.3% in August 2024", he continued. Amongst the food articles whose prices dipped during the month were cereals (8.44%), paddy (9.12%), pulses (18.57%) and onions (65.75%), it did little to tame inflation, which continued to stay put in double digits. On the other hand, prices of potato (77.96%) and fruits (16.7%) inched up. The dip in WPI was largely led by slowdown in prices of manufactured food products (3.61%), beverages (1.9%), pharmaceuticals (1.97%) and petrol (4.23%). "While there may not be a one-to-one correspondence between the WPI and the CPI data because of the items, size, number, and relative weights assigned, the CPI data will also down-trend in sync with the RBI’s medium-term target of 4 % for the second time in nearly five years. However high food prices will induce the RBI to be wary", notes Manoranjan Sharma, Chief Economist, Infomerics Ratings.

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