A recent rise in milk prices is likely to push retail inflation up in August as it carries a weightage of 16.92 per cent in the consumer food price index, analysts feel.

They believe retail inflation may fall below 6 per cent by the fourth quarter of this financial year, bringing an end to the current cycle of rate hikes.

Following the release of minutes from the central bank’s monetary policy committee on Friday, analysts said the Reserve Bank of India may hike repo rates 50-60 basis points by December.

“We expect the RBI to deliver two 25 bps rate hikes at the September and December meetings, taking the repo rate to 5.90 per cent,” Rahul Bajoria, chief India economist at Barclays, said.

India’s consumer inflation dipped to 6.71 per cent in July, easing for the third month in a row, but remained above the RBI’s mandated target band of 2-6 per cent for the seventh straight month.

Despite signs of inflation having peaked in India, the outlook remains highly uncertain, members of the central bank’s monetary policy committee said in their report.

Bringing retail price rise closer to the RBI’s target of 4 per cent is essential to sustain economic growth over the medium term, the committee said.

Earlier this month, the RBI raised the bank’s key lending rate by 50 bps to 5.40 per cent, its third increase in four months to curb rising price pressures.

The RBI has hiked the repo rate by 140 basis points since May. However, there are factors analysts said that could push up inflation, especially food inflation.

They pointed out that the recent hike in milk prices could lift CPI inflation for August by 25 basis points.

The lower sowing of rice and less than estimated procurement of wheat is pushing up prices and could further increase during the forthcoming festive season.