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Indian inflation eases, but COVID-19 curbs risk stoking prices

Indian inflation eases, but COVID-19 curbs risk stoking prices

FILE PHOTO: A man sorts yams in a supply truck at a wholesale market in Mumbai, India, December 14, 2018. REUTERS/Francis Mascarenhas

NEW DELHI -Indian inflation eased to a three-month low in April as food costs rose more slowly, but lockdowns to contain the country's raging coronavirus epidemic risk creating supply bottlenecks that could fuel price pressures in coming months.

Annual retail inflation rose 4.29per cent, down from 5.52per cent in March and near the 4.20per cent forecast in a Reuters poll of economists.

Food prices, which account for nearly half of the Ministry of Statistics' inflation basket, rose 2.02per cent compared with 4.87per cent in the previous month.

"Any comfort from this could be illusory," Rupa Rege Nitsure, chief economist at L&T Financial Services said, warning of a build-up of inflationary pressures that risked affecting wholesale prices first.

Concern about high global commodity prices and supply chain disruptions amid widespread curbs on movement led the central bank last month to raise its inflation projection for the six months to September to 5.2per cent.

That still places it within the bank's target range of 2-6per cent.

India's second COVID-19 wave, which official figures show is infecting around 350,000 people and killing around 4,000 per day, has forced nearly two-thirds of the country to introduce tough curbs that have slowed economic activity.

The likelihood that India will receive an average amount of rain in the 2021 monsoon should however help ease inflationary pressure as a normal rainy season generally translates into higher farm output.

April core inflation, excluding food and fuel costs, was estimated in the range of 5.4per cent to 5.43per cent by three economists, compared with 5.9per cent to 6.0per cent in March. India does not release official core inflation data.

(Additional reporting by Chris Thomas; Editing by Alex Richardson and John Stonestreet)

Source: Reuters/ic

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