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India's retail inflation eases in November; experts comment

The inflation ease was helped by a sharp cooling in food prices, government data showed on Tuesday.

Published: 13th December 2016 05:51 PM  |   Last Updated: 13th December 2016 06:02 PM   |  A+A-

Image used for representational purpose only. (File photo |Reuters)

Image used for representational purpose only. (File photo |Reuters)

By Reuters

NEW DELHI: India's annual consumer price inflation eased to 3.63 percent in November, its lowest level in two years, helped by a sharp cooling in food prices, government data showed on Tuesday.

Economists surveyed by Reuters had expected annual retail inflation to come in at 3.90 percent last month, compared with 4.20 percent in October.

Food inflation was 2.11 percent last month, lower than 3.32 percent recorded in October. 

Below are recorded expert comments on the inflation ease:  

RUPA REGE NITSURE, CHIEF ECONOMIST, L&T FINANCE HOLDINGS

"The fall in inflation has been mostly due to demonetisation as perishable prices have crashed. Pulses inflation has also cooled down due to good production.

"Going ahead I expect the demonetisation impact to help cool off inflation til February due to demand contraction. Also since the services PMI has contracted faster than manufacturing PMI it shows that this will also help ease core inflation going ahead, which has been quite sticky.

"Keeping in view all the growth-inflation dynamics going ahead I expect RBI to cut rates in February. Also in all likelihood the government will stick to its fiscal deficit target in the budget in February, which will also help RBI in cutting rates.

"The only risk to this projection is oil prices rising."

ANJALI VERMA, ECONOMIST, PHILLIPCAPITAL INDIA

"It is in line with our expectations. We now hope for a rate cut because it is, at the same time, below consensus expectations.

"We are anticipating that even going ahead inflation will remain muted, anywhere around 4 percent.

"We are looking at 75 to 100 (basis points in rate cuts) for the next one year.

"The only marginal risk that I see is from fuel or oil prices. Other than that, I think demonetisation will be disinflationary and it will have a reasonable impact. It won't be just transient."



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