India’s consumer inflation is expected to have climbed to a 20-month high in August, driven by rising food and fuel costs, according to a Reuters poll of economists.
Annual inflation, measured by the consumer price index, was forecast at 4.80%, up from 4.45% in July. Estimates from the 44 economists surveyed between September 3 and 9 ranged from 4.40% to 5.05%.
The figures, due to be released on September 14, would mark a third consecutive month in which inflation has exceeded the Reserve Bank of India’s medium-term target of 4%.
Prices of essentials including sugar, cereals, milk, edible oils, eggs and meat were pushed higher after an erratic monsoon disrupted supplies. Rising global crude prices, which have approached $100 a barrel, and more expensive cooking gas also added to pressure on household budgets.
“The increase is expected to be primarily driven by elevated food prices together with a further rise in fuel inflation,” said Kanika Pasricha, chief economic adviser at Union Bank of India.
Sugar was among the most significant contributors. Prices reached a record high in August and were estimated to have added at least 15 basis points to headline inflation, according to Pasricha.
The Indian government has prohibited most sugar exports until September 30 in an attempt to protect domestic supplies. It has also opened arrangements for the import of 1m tonnes of raw sugar, while official figures show prices rose from 48.18 rupees a kilogram on July 20 to 55.70 rupees on August 20.
Lower prices for potatoes and peas continued to provide some relief, helping to limit the overall rise in consumer inflation.
Core inflation, which excludes volatile food and fuel prices, was expected to increase to 4.1% in August. India does not publish an official measure of core inflation.
The RBI kept interest rates unchanged last month as inflation remained within its permitted 2% to 6% band. Minutes from the meeting indicated that policymakers were prepared to tighten policy if price pressures spread more widely, although economists do not expect a rate increase until next year.
Wholesale price inflation was also forecast to edge up, reaching 9.89% in August from 9.78% in July and remaining close to 10% for a fourth successive month.
