NEW DELHI :
Driven by rising onion prices, retail inflation in India rose in October to 4.62% from 3.99% a month ago, surpassing the central bank's 4% mid-term target for the first time since July 2018.
Bloomberg's survey of 33 economists rose slightly to 4.35% in October. Food inflation rose to 7.89% in October from 5.11% a month earlier.
However, rising inflation is unlikely to deter the Reserve Bank of India from lowering policy rates in its December monetary policy review, with a set of macroeconomic data pointing to a sharper than expected slowdown in the Indian economy. The RBI has already cut policy rates five consecutive times, this year with a cumulative 135 basis points of 5.15%.
India's factory performance declined by 4.3% for the second month in September, marking the worst show of the current series in April 2012. This could mean that GDP growth is likely to slow to less than 5% in the quarter ended September, data that is due to be released on November 29. The rate of economic growth cooled to a minimum of six years of 5% in June.
Nomura predicted that GDP growth in September quarter would drop to 4.2% from 5% in June quarter of F20. Brokerage cut last week's overall GDP growth forecast for FY20 to 4.9% from 5.7% previously estimated, the lowest ever for forecast agencies.
Flood disruptions in states such as Maharashtra in August have led to onion prices ₹80 per kilogram in some parts of the country. After banning onion exports and imposing stock restrictions on local traders, the center decided to import the basic kitchen ingredient to prevent price rises.
"The government has decided to import 1 lakh tonnes of onions to control onion prices. The MMTK will make imported onions available for distribution in the country from November 15 to December 15, and NAFED is entrusted with the responsibility of distributing onions to every part of the country, "Consumer Minister Ram Bilas Pasvan tweeted last Saturday.