13
Economists said food prices soared due to a pickup in demand ahead of the festival seasonNew Delhi: Retail inflation in the country picked up in September to 7.34 per cent, its highest level in eight months, as food prices surged ahead of the festival season, increasing chances of a further delay in a rate cut by the central bank to bolster the shrinking economy.September's annual retail inflation was much higher than the forecast of 6.88 per cent in a poll of economists by news agency Reuters, and the previous month's 6.69 per cent, government data showed on Monday.Retail inflation has remained above 4 per cent, the middle point of the Reserve Bank of India's (RBI) target of 2-6 per cent, for a year.Economists said food prices soared due to a pickup in demand ahead of the festival season that runs from October to March, and supply-side disruptions caused by the coronavirus lockdown.They rose 10.68 per cent in September compared to a rise of 9.05 per cent in the previous month as prices of edible oil, meat and vegetables rose in a range of 13-21 per cent from a year before, the data showed.Sakshi Gupta, senior economist at HDFC Bank, said the surprisingly high inflation print dimmed the outlook for further monetary easing."The space for further rate cuts in FY21 now seems to be closing, even perhaps for the February meeting," she said, adding that the central bank was likely to keep an accommodative stance and to focus on managing the yield curve and liquidity.Last week, the RBI left key policy rates unchanged amid fears of elevated inflationary pressure, while retaining an accommodative monetary stance to support an economy that is projected to contract by almost 10 per cent in the current fiscal year.A central bank survey of households showed that inflation was likely to decline modestly over the next three months.Core inflation for September stood at 5.7 per cent, according to two analysts approached by Reuters after the data release.Separately, data released on Monday showed India's industrial output contracted 8 per cent in August from a year earlier.
