India’s retail inflation accelerates in October

India’s annual retail inflation rose to 4.48 per cent % in October compared with 4.35 per cent in the previous month, government data released on Friday showed. Analysts in a Reuters poll had predicted annual inflation at 4.32 per cent.

 Radhika Rao, economist at DBS Bank, Singapore said, “October CPI inflation at 4.5% y/y registered a modest uptick from September, notwithstanding favourable base effects, validating our expectations that the lull in inflation seen in late-3Q was unlikely to last. “ “Base effects have kept average CPI in Sept-Oct21 within 4-5% at the upper end of the RBI’s target range, but the trend into late-2021 and Q1of 22 is headed north on a pass-through of higher input prices, imported energy costs, narrowing output gap and seasonal bouts of food/perishables.”

“While support measures like fuel excise cuts and import tax cuts offset part of the near-term pressures, the broad upside in inflation is likely to see the central bank prepare the ground for reverse repo rate hikes followed by a change in policy stance.”

Separately, IT and energy stocks boosted Indian shares on Friday, helping the main indexes end the week with gains of more than 1%.

The blue chip NSE Nifty 50 index and the benchmark S&P BSE Sensex gained 1.28% each to end at 18,102.75 and 60,686.69, respectively.

The main indexes struggled this week and fell about 0.7% on Thursday, tracking weak global cues following a big jump in US consumer prices.

But European and Asian shares gained on Friday as investors looked past the big surge in US inflation.