India July Inflation Hits 4.45% as RBI Holds Rates

India's consumer price index rose to 4.45% in July, marking the ninth consecutive monthly increase. While the figure remained within the Reserve Bank of India's target range of 2% to 6%, it exceeded the central bank's specific 4% target. Data from the Ministry of Statistics and Programme Implementation showed food inflation accelerated to 5.5%, while personal and goods transport inflation both surpassed 7%.

Sanjay Malhotra, Governor of the Reserve Bank of India, stated that price pressures remain more or less under check and described core inflation as moderate. However, he warned that the economic outlook is hazy due to global trade policy, geopolitics, and weather uncertainties. The central bank expects inflation to reach 5% for the year ending in March and cautioned that prices may peak in the December quarter as food and fuel costs rise.

The Reserve Bank of India has maintained interest rates at 5.25% for four consecutive meetings, viewing current Middle East conflicts as temporary supply shocks. Despite this hold, Morgan Stanley predicts the central bank will begin hiking rates in December to reach a terminal policy rate of 6.0% to combat persistent inflation.