India's inflation 'uncomfortably high': Moody's Analytics

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India's inflation is at "uncomfortably high" level, which is an exception among Asian economies, Moody's Analytics said on Tuesday.

Higher fuel prices will keep upward pressure on retail inflation and keep the RBI from offering further rate cuts, said Moody's Analytics, a financial intelligence company.

In its macro roundup, Moody's Analytics said inflation is subdued in most of Asia, and expected to only gradually pick up over 2021 because of rising oil prices and economies starting to reopen.

Brent crude has climbed 26 percent this year at around USD 64 per barrel. It was around USD 30 per barrel in March 2020, when the COVID-19 crisis was near its peak.

"India and the Philippines are exceptions. In these economies, inflation is above comfort levels, adding to the list of challenges for policymakers," it said.

Stating that  India's inflation is "worrisome", it said volatile food prices and rising oil prices led retail inflation to exceed the upper band of 6 percent several times in 2020, inhibiting the RBI's ability to keep accommodative monetary settings in place during the height of the pandemic.

Under the monetary policy framework, RBI has a target for maintaining retail inflation at 4 percent  (+/- 2 percent).

"RBI is expected to retain its current inflation targeting band beyond its current expiry date of March 31," Moody's Analytics added.