A worker works at an overpass construction site amid smog in New Delhi. (Reuters)
Consumer inflation rose again to pre-virus highs in October, and almost all broad categories except fuel saw prices rise. While the fourth quarter is likely to mark the peak of inflation, we have become more cautious on the trajectory during 2021, “he said.
- PTI
- Last update: November 15, 2020 12:07 PM IST
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The Indian economy is expected to recover faster than expected and the Reserve Bank has likely reached the end of the rate easing cycle, according to global forecasting firm Oxford Economics.
Furthermore, he said that inflation is expected to average significantly above 6 percent in the fourth quarter of the current fiscal year and that the RBI could maintain interest rates at the December monetary policy review meeting.
“Consumer inflation rose again to pre-virus highs in October, and nearly all broad categories except fuel saw prices rise. While the fourth quarter is likely to mark the peak of inflation, we have become more cautious on the trajectory during 2021. ” He said.
The most expensive vegetables and eggs pushed retail inflation to a nearly six-and-a-half-year high of 7.61 percent in October, keeping it significantly above the Reserve Bank’s comfort zone. Retail inflation stood at 7.27% in September 2020.
“At the same time, strong data from upward activity suggests that the economy may be recovering faster than we anticipate. As such, we see a growing possibility that the RBI’s easing cycle is over,” said Oxford Economics.
Moody’s Investors Service has also revised up its GDP forecast for India to (-) a contraction of 8.9 percent in calendar year 2020 as the economy reactivates after a long and strict national lockdown, but added that recovery is spotty.
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