Macro November 06, 2019 / 04:20 am UTC

India Preview: Due November 13 - October CPI to See a Temporary Surge Above 4%

By Charu Chanana

India's October inflation data are scheduled for release after markets close on November 13. We expect inflation to accelerate to 4.30% y/y from 3.99% y/y in September, which would be the highest print in 16 months and above the Reserve Bank of India's (RBI) mid-point target of 4%. Increases in food prices could once again be the biggest driver for the inflation surge, while we expect fuel and electricity inflation to continue to remain in negative territory.

Meanwhile, India's widening output gap has likely continued to weigh on core measure, so core inflation may drop further—making room for headline inflation also to return to sub-4% levels next year. This will allow the RBI to continue to tread on its easing path, even after the 135 bps of rate cuts so far this year.

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I, Charu Chanana, the lead analyst certify that the views expressed herein are mine and are clear, fair and not misleading at the time of publication. They have not been influenced by any relationship, either a personal relationship of mine or a relationship of the firm, to any entity described or referred to herein nor to any client of Continuum Economics nor has any inducement been received in relation to those views. I further certify that in the preparation and publication of this report I have at all times followed all relevant Continuum Economics compliance protocols including those reasonably seeking to prevent the receipt or misuse of material non-public information.