It further said inflation is expected to average significantly above 6 per cent in the fourth quarter of the current fiscal and the RBI may hold policy rates in December monetary policy review meeting.
“Consumer inflation rose back to pre-virus highs in October, with almost every broad category other than fuel experiencing a rise in prices. While Q4 is likely to mark the peak for inflation, we have turned more cautious on the trajectory over 2021,” it said.
Costlier vegetables and eggs pushed up retail inflation to a nearly six-and-a-half year high of 7.61 pc in October, keeping it significantly above the comfort zone of the Reserve Bank. Retail inflation stood at 7.27 pc in September 2020. “At the same time, robust bottom-up activity data suggest that the economy may be recovering faster than we anticipated. As such, we see an increasing possibility that the RBI’s easing cycle has ended,” Oxford Economics said. Moody’s Investors Service has also revised upwards its GDP forecast for India to (-) 8.9 pc contraction in the 2020 calendar year, as the economy reflates after a long and strict nationwide lockdown but added the recovery is patchy.