Retail inflation, measured by consumer price index (CPI), is likely to rise further above the Reserve Bank of India's medium-term target, a Reuters poll showed.
A Reuters poll of 47 economists conducted between 6 and 8 October suggested that the consumer prices rose 6.8 percent in September from the same month a year ago, which would be the highest in 5 months and the faster than 6.68 percent in August.
If realised, inflation would be above the top end of the RBI's medium-term target range of 2-6 percent for the sixth consecutive month.
Despite a steep contraction of 23.9 percent in GDP in the April-June quarter, the RBI had to keep interest rates unchanged at the monetary policy meeting that ended on Friday to balance the high inflation. Persistent high prices have hurt the economy as the country continues to see a rise in coronavirus infection cases.
Since March, RBI has cumulatively cut its repo rate by 115 basis points. India's inflation target is 4 percent, with a 2 percent band on either side of it but inflation has breached the 6 percent mark after the outbreak of COVID-19.
With an optimistic view, RBI governor on Friday said inflation will get closer to target by the fourth quarter of the current financial year.
"The mood is shifting from fear and despair to hope. Inflation will ease closer to target by Q4FY21. GDP growth may turn positive by Q4. India is likely to see speedy recovery with variations across sectors. Agriculture, consumer goods, power, and pharma sectors to see quicker recovery," he said.