Market News
India's December retail inflation rises to 1.33% y/y - REUTERS
SAKSHI GUPTA, PRINCIPAL ECONOMIST, HDFC BANK, GURUGRAM
"Inflation inched up marginally in December as the base effect was less favourable and gold prices were higher in the month. We believe the bottom for inflation is now behind us and inflation could continue to edge up over the coming month, although still expected to remain well below 4% uptill mid-2026. Overall Inflation remains comfortably below 2% for now suggesting that the overall inflation dynamics remain favourable. With today’s print, inflation has averaged at 0.77% in Q3 marginally higher than the RBI’s estimate of 0.6%. We expect an average of 2.8% for Q4.
However, we do not expect a further rate cut in the Feb policy by RBI as growth continues to hold up and the focus is likely to be on supplying liquidity to enable transmission of past rate cuts. We estimate inflation at 4% in FY27 vs. 2% in FY26. Although these estimates could be influenced by the new series data that is to be released for CPI from the next month."
(Reporting by Hritam Mukherjee, Chandini Monnappa in Bengaluru; Editing by Harikrishnan Nair)
