Food prices push India's retail inflation higher in August

Food prices push India's retail inflation higher in August

Food prices push India's retail inflation higher in August

"With the Bank of England meeting this week the hawks may well be emboldened by today's price growth, but with the pay squeeze entrenching itself more deeply month by month the policy hawks (wanting a rate hike) will find their room for manoeuvre sorely limited", said Chris Beauchamp, chief market analyst at IG trading group, said following Tuesday's data.

India´s consumer price index (CPI) rose 3.36 percent in August from a year earlier, data released by the Ministry of Statistics on Tuesday showed.

Radhika Rao, India economist at DBS Bank, attributed the jump in the headline and core inflation numbers in August to higher transport, housing and "transient" impact from price changes due to the GST rollout.

GBP/USD traded above 1.32600 on the release of higher than expected United Kingdom inflation data, putting pressure on the United Kingdom central bank to temper price rises.

United Kingdom consumer prices rose 0.6% in August compared with consensus forecasts of 0.5%.

Wholesale prices were expected to rise 3.00 percent last month from a year ago, from 1.88 percent in July, the poll forecast.

The drop in the value of the pound since the Brexit referendum in June a year ago boosted import prices, which partly fueled price growth for household items. The MPC will announce its latest interest rate decision on Thursday, which is broadly anticipated to see rates remain on hold at 0.25%. "As the slowdown is more pervasive this time in terms of number of sectors, it calls for urgent need to revive investments through reforms especially at the State level and also by bringing down interest rates".

- All eyes on Wednesday's United Kingdom wages and employment releases.

Inflation had eased to 1.46 percent in June - its slowest pace since India started releasing retail inflation figures in January 2012, based on combined data for rural and urban consumers.

The YoY CPI in urban areas ruled higher at 3.35 per cent, whereas in rural India it rose by 3.30 per cent.

"We do not see significant room for monetary policy accommodation given the fact that rates are near their all-time low and inflation is now on a rising trajectory", said Teresa John, an economist at stock brokerage Nirmal Bang.

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