India's Retail Inflation Likely Eased To 5.53 Per Cent In November, Down From October's 14-Month High: Reuters Survey

India's retail inflation likely declined to 5.53 per cent in November, according to a Reuters survey of 56 economists, following a surge to a 14-month high of 6.21 per cent in October.

The dip is attributed to moderating vegetable prices and stabilisation in edible oil costs, bolstered by fresh produce arrivals and earlier import duty hikes on edible oils.

The Reserve Bank of India (RBI) held interest rates steady last week, citing persistent price pressures despite a sharper-than-expected slowdown in economic growth in the previous quarter.

The central bank recently raised its inflation forecast for the current fiscal year to 4.8 per cent from 4.5 per cent while lowering its growth estimate to 6.6 per cent from 7.2 per cent, underscoring concerns over food inflation.

Rahul Bajoria, head of India and ASEAN economic research at BofA Securities, noted in a recent report that easing vegetable and edible oil prices will temper inflation in the coming months.

"Vegetable prices are showing first signs of moderation and edible oil prices are also stabilizing after the duty hikes," Bajoria stated, adding that the current crop harvest is likely to "act as a dampener on prices over the medium-term."

While inflation remains within the RBI's 2 to 6 per cent tolerance band, only two economists predicted it would stay at or above the upper limit. Core inflation, excluding volatile food and energy prices, was estimated to be steady at 3.70 per cent in November, based on data from 29 economists.

"Overall, India's high headline inflation remains narrowly based on vegetable prices, excluding which, inflation is below 4 per cent," said Dhiraj Nim, economist at ANZ. He emphasised that factors such as easing farm input costs, per capita income growth, and food demand support expectations for falling food inflation.

Wholesale Price Index (WPI) inflation was also projected to ease to 2.20 per cent in November, down from 2.36 per cent in October.

The Indian statistics agency is set to release official CPI data on December 12, providing more clarity on the inflation trajectory as the country navigates both food price volatility and economic challenges.