, India

India August inflation spike to limit policy rate cut

But a 25bp slash in cash reserve ratio still looms.

According to BBVA, India’s wholesale price inflation jumped in August to 7.6% y/y (consensus: 7.1%) from 6.9% in July, driven by a broad based pick up in prices. Core inflation rose for a fifth straight month (5.7% y/y vs 5.4% previously) as a rise in global commodity prices fueled input cost pressures.

Here's more from BBVA:

Looking ahead, upside risks to our 7.3% inflation projection for 2012 have increased, particularly in light of yesterday’s decision by the government to hike diesel prices, and a probable extension of the liquidity-led rally in global commodities following QE3.

We expect the RBI to keep rates steady at its next policy meeting on September 17th given India’s still-high inflation rate, but a 25bp cut in the cash reserve ratio to 4.5% is possible in order to help reduce funding costs for banks. We continue to expect 50bps in rate cuts in the last quarter of 2012 to address growth concerns.
 

Join Singapore Business Review community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!