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Indian inflation likely accelerated in February but remained well below the central bank’s target, economists in a Reuters poll said, as only modest rises in food and fuel prices failed to drive a bigger lift from January’s 19-month low.<\/p>\n
The poll of 37 economists, conducted March 5-7, showed consumer price inflation, due to be released at 1200 GMT on March 12, is expected to have picked up to 2.43 percent last month from January’s 2.05 percent.<\/p>\n
An overwhelming majority of economists polled predicted inflation would average below 3 percent, with forecasts ranging from 2.15 percent to 3.20 percent.<\/p>\n
If inflation comes in as expected, it would be below the Reserve Bank of India’s medium-term target of 4 percent for the seventh month in a row and closer to the lower end of its 2-6 percent buffer range for a fourth month.<\/p>\n
“Headline CPI inflation will have remained low in February even if, as we suspect, it rose a touch due to higher food inflation,” noted Shilan Shah, senior India economist at Capital Economics.<\/p>\n
Another low inflation reading would support the RBI’s surprisingly dovish turn early last month, when it cut interest rates and shifted its policy stance to “neutral” from “calibrated tightening”.<\/p>\n
A Reuters poll of economists taken immediately after that decision showed another RBI rate cut expected before May’s general election.<\/p>\n
But core inflation is expected to remain elevated with a separate Reuters polls showing oil prices rising and a potential trade conflict with the U.S. weakening the Indian rupee, which would both be inflationary.<\/p>\n
“Inflation is going to creep upward as we already see fuel prices pumping up following a lead from global oil prices which are going higher,” said Prakash Sakpal, Asia economist at ING.<\/p>\n
“Plus, we have a weaker rupee – although INR has consolidated a bit since February – it is not totally out of the woods yet.”
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