‘Inflation at worrisome levels, oil prices will keep up pressure’

India expected to retain current inflation targeting framework: Moody’s Analytics

Inflation has breached comfort levels and assumed ‘worrisome’ proportions in India, Moody’s Analytics on Tuesday said in a note on Asia’s inflation worries driven by rising oil prices. Stressing that India’s retail inflation has been breaching the Reserve Bank of India’s (RBI’s) 4% inflation target for the past eight months, the financial intelligence firm said India and Philippines are the two notable exceptions — in Asia — where inflation is beyond the comfort level. “Volatile food prices and rising oil prices led India’s CPI (consumer price inflation) to exceed the upper band of 6% several times in 2020, inhibiting the RBI’s ability to keep accommodative monetary settings in place during the height of the pandemic. Higher fuel prices will keep upward pressure on headline CPI and keep the RBI from offering further rate cuts,” said the firm, which operates independently of Moody’s Investors Service, the credit rating agency.