Exclusive Webinar :Gain complete knowledge about how you can invest in global markets during an insightful webinar on April 16 at 11 am. Register Now!

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

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.

March 30, 2021 / 05:38 PM IST
Representative image

Representative image


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.





Retail inflation rose to 5 percent in February, from 4.1 percent in January. The Reserve Bank mainly takes into account retail inflation while deciding on the monetary policy.






Core inflation (which excludes food, fuel and light) was up 5.6 percent in February, from 5.3 percent in January, Moody's Analytics said, adding India's inflation is "uncomfortably high".

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.

Close

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.
PTI
first published: Mar 30, 2021 05:38 pm

stay updated

Get Daily News on your Browser
Sections