Macro Bite - India : RBI's inflation problem refuses to abate

The start of rate cuts is now delayed to 2025, raising the likelihood of an off-cycle cut and a more aggressive easing cycle.

India’s headline inflation jumped back above 6% y/y in October, vindicating the RBI’s decision to keep policy rates unchanged last month. The spike was driven by a 42%y/y increase in vegetable inflation, which pushed food inflation to a 15-month high of 10.9%y/y. Core-core inflation (headline CPI excluding all fuels) also ticked up to 4%y/y and is now 0.7ppt above its June low. However, the majority of the increase in core inflation has been driven by higher gold prices.