GBP/INR is declining in early trade on Thursday, as India released better-than-expected retail inflation data. Currently, one British pound buys 92.407 Indian rupees, down 0.31% as of 6:27 AM UTC.
Recently, a set of fresh economic data from India showed that retail inflation last month exceeded the Reserve Bank of India’s medium-term target of 4% for the first time in more than a year. Thus, inflation hit 4.62% in October, from 3.99% in September. The increase was driven by higher food prices even though the central bank expected that they “are likely to moderate as winter supplies enter the market.”
Consumer food price inflation accounts for about 50% of the inflation basket. It jumped last month to 7.89% from 5.1% in September.
Growth in core inflation, which excludes prices of energy and food items, slowed to 3.4% in October, from 4% the previous month, which is the lowest level in 94 months.
Elsewhere, pulses inflation surged 11.72% from 8.4% month-on-month and vegetable prices jumped to 26% from 11.4%.
The surge in consumer inflation eased expectations of a big cut in interest rates by the central bank next month, though most analysts anticipate ongoing easing measures amid a slowdown in India’s economy.
India Ratings chief economist Devendra Kumar Pant commented:
“With the economic growth slowdown, we believe growth concerns will dominate RBI’s monetary policy review and it will continue with accommodative policy and expect further rate cut in the policy review of December.”
The rupee also found some slight support after Prime Minister Narendra Modi met Chinese President Xi Jinping yesterday in Brazil at the 11th BRICS Summit. Modi said there had been “a new direction and new energy” in Sino-Indian relationship. Modi and Xi discussed strategies to further improve the ties between the two countries.
Last month, the two leaders met in India for their second informal summit in Chennai.
Modi is no in Brazil for the BRICS meeting that revolves around building mechanisms for counter-terrorism cooperation. The PM will try to further strengthen the relationship with five major economies of the world, including Brazil, Russia, China, and South Africa.