India July inflation likely breached RBI's 6% upper tolerance level: Reuters poll

The Aug. 3-8 Reuters poll of 53 economists predicted the consumer price index (CPI) rose at an annual rate of 6.40 percent in July.

The forecast range was 4.85 percent-7.60 percent, with a strong three-quarters majority expecting it to surpass the central bank's top end of the inflation target band, suggesting the food price surge was likely to persist at least for the next few weeks.

"There are no signs of any sequential moderation in food prices in August," noted Rahul Bajoria, chief India economist at Barclays. "Although it is still early in the month, we expect CPI inflation prints to remain elevated in the next couple of months, and then start easing in Q4 2023."

A majority 86 percent, 24 of 28, economists who answered an additional question said inflation will stay above six percent by the end of the current quarter.

If the poll median is correct, the current surge in inflation was likely to outstrip the 5.2 percent the RBI projects for this quarter.

"Sudden spikes in food inflation generally last for three to four months before they start to mean revert and when they do, the fall is equally sharp," noted Kunal Kundu, India economist at Societe Generale, but added that was not always the case.

The survey also showed wholesale price inflation, the change in producer prices, likely fell 2.70 percent year-on-year in July, after a 4.12 percent decline in June.