Mumbai (Maharashtra) [India], October 13 (ANI): India’s retail inflation in September remained broadly in line with the Reserve Bank of India’s (RBI) expectations, but severe weather conditions and high crude oil prices could keep food and fuel inflation elevated for longer, Debopam Chaudhuri, Chief Economist at Piramal Finance, said in an exclusive interview with ANI on Tuesday.
Chaudhuri said the gradual rise in Consumer Price Index (CPI) inflation was already anticipated by the market, adding that the latest data did not indicate any sharp or unexpected rise in prices.
“If you look at the September quarter inflation, it is exactly at a rate at which RBI had predicted it to be. So there is no question of any runaway inflation being visible in this data, and I think RBI will stay on its course,” he said.
However, he warned that severe weather conditions and elevated global crude oil prices could put further pressure on inflation in the coming months.
Referring to El Niño conditions, Chaudhuri said the weather phenomenon could affect both kharif crop production and rabi sowing, potentially keeping food prices high for longer than expected.
“It is turning out that the El Niño that we are going through this year is one of the most serious since the 1980s,” he said.
He added that persistently high international crude oil prices were increasing India's import costs and adding to imported inflationary pressures.
On the impact of exchange rate fluctuations, Chaudhuri said central bank intervention and a possible easing of the US dollar could provide temporary relief. However, he cautioned that the impact of elevated crude oil prices would take longer to ease.
He said industries were likely to gradually pass on higher input costs to consumers, keeping inflationary pressures in the economy.
Highlighting the impact on consumption, Chaudhuri said higher inflation in rural areas could weigh on spending. He expects urban consumption to grow faster than rural spending due to differences in the impact of inflation across the two segments.
“I am expecting to see urban spending to be much faster than rural spending because of this dichotomy in the way inflation is hitting these two segments,” he said.
On monetary policy, Chaudhuri expects the RBI to keep interest rates unchanged at its December policy meeting, as inflation remains broadly in line with the central bank’s projections.
“I don't expect another rate hike in December, primarily because the inflation that we have seen so far is pretty much in sync with RBI expectations,” he said.
However, he expects the RBI to consider gradual rate hikes in the following months, with potential increases of 25 basis points each in February and April.
Despite the risks posed by weather conditions and high import costs, Chaudhuri remained optimistic about India's economic outlook, projecting the country's growth rate at around 6.9 per cent in the financial year 2026-27 (FY27).
“Overall, I think the growth rate in FY27 should be close to around 6.9 per cent,” he said. (ANI)
El Niño, sticky crude may push inflation up, but growth to stay strong: Piramal Finance's Economist
