India inflation likely crept closer to 6% in December: Mint poll

livemint.com:

India’s retail inflation likely rose for the second straight month to 5.9% in December 2023 mainly on account of an unfavourable base effect, according to the median estimate given by 19 economists in a Mint poll. The uptick, which comes after a 5.55% print in November, could support the Reserve Bank of India’s (RBI’s) decision to hold the repo rate steady at 6.5% for the fifth time a row last month. The predictions in the poll ranged between 5.5% and 6.4%, with six economists expecting inflation to be at or above 6%, the upper tolerance limit of the RBI’s inflation targeting mandate.

The official data will be released on 12 January. “The expected pickup in inflation is mainly on account of higher vegetable inflation compared to the same month previous year, even as prices have started to soften sequentially," said Abhishek Upadhyay, senior economist at ICICI Securities Primary Dealership. In December 2022, the vegetable index had declined 12.7% sequentially, while the prices in December 2023 are expected to have remained sharply higher despite the moderation from November.

Food items, which account for nearly 40% of the inflation basket, had seen their inflation ease in the three months prior to November. However, it increased in November due to a sharp rise in vegetable prices. The central bank, too, in its latest policy meeting, warned of a pick-up in headline inflation in November-December due to uncertainties in food prices.