Food inflation may stay high; ICICI Bank sees RBI rate hike
In short
Food inflation in India is expected to stay high in the coming months. ICICI Bank expects the Reserve Bank of India to raise interest rates by 25 basis points in December. The pressure is being linked to a crop shortfall, weak monsoon and high energy prices.
What the reporting says
Food inflation in India is projected to stay elevated in the coming months, with ICICI Bank expecting the Reserve Bank of India to raise rates by 25 basis points in December. The outlook is linked to a crop shortfall, weak monsoon and high energy prices, which are adding pressure to essential food items. The expected rate move would be aimed at managing retail inflation.
Why it matters
Food inflation in India is expected to remain elevated, and ICICI Bank has projected a 25 basis point RBI rate hike in December. The reported drivers are a crop shortfall, weak monsoon and high energy prices, which are pushing up prices of essential foods. The market implication is tighter monetary policy if the RBI acts to curb retail inflation.