India's Retail Inflation Rises to 5.54% in September, Exceeding Estimates
India’s retail inflation climbed to 5.54% in September from 4.82% the previous month, surpassing economists' expectations of 5.40%. This marks an increase for the 11th consecutive month and reaches a 22-month high. The Reserve Bank of India (RBI) has raised interest rates for the first time since 2023 in response to rising inflationary pressures. The RBI expects core inflation at 4.4% and headline inflation at 5.2% for FY27, both above its medium-term target of 4%. The central bank also warned that further rate cuts are unlikely in the near term, with policy actions likely being a pause or another hike. Analysts from HSBC anticipate an additional rate increase by December. India's inflation is exacerbated by global factors such as supply disruptions due to Middle East tensions and elevated oil prices. Domestically, extreme drought conditions threaten food production, particularly in key agricultural states like Maharashtra and Punjab.
Topics: economic growth inflation monetary policy Reserve Bank of India (RBI)