Bangalore: Of India retail inflation Food and fuel prices in July are likely to ease due to the fall, yet remain well above the Reserve Bank of India’s upper tolerance limit for the seventh consecutive month, a Reuters survey found.
Food prices, which constitute nearly half of the consumer price index basket, softened last month. But the bulk of the slowdown has come from lower international prices and less impact of government intervention to ease import duties and restrictions on wheat exports.
near term inflation outlook This year’s monsoon remains highly uncertain as the uneven nature and weakening rupee currency could reduce the effectiveness of those government efforts to contain consumer price hikes.
A Reuters poll of 48 economists in August 2-9 showed inflation, as measured by the Consumer Price Index (CPI), fell to an annualized 6.78% in July, from a five-month low of 7.01% in June.
The forecast for the data ranged from 6.40% to 7.10%, which is due at 1200 GMT on 12 August.
“Food and energy prices are essentially easing quite modestly, even though the rupee has hit historic lows in recent weeks,” said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.
“It (inflation) may remain sticky over the next few months, but it is not going to get worse than where we are currently.”
wholesale price inflation The survey showed that it declined to 14.20% in July, from 15.18% in June.
While cuts in fuel taxes helped ease price pressures to some extent, consumer price growth is expected to continue at a faster pace in the coming months.
India’s central bank, a relative laggard in a global tightening cycle, on Friday raised interest rates by 50 basis points to 5.40%, taking it above where it was before the pandemic, with more rate hikes expected.
Governor Shaktikanta Das has warned that persistently high cost of living conditions could translate into higher wages and inflation, which are unlikely to fall within the top end of the mandated target band by December.
This is broadly in line with a separate Reuters poll in which inflation remains above target until early next year.
Mitul Kotecha, Head of Emerging Markets Strategy, TD Securities, said, “We expect the RBI to continue to hike rates over the next few months. We expect at least a 25bp hike in September, followed by a 25bp hike in December 2022. are supposed to.” Risks quoted by Das wherein inflation remains above the target band for a few more months.
Food prices, which constitute nearly half of the consumer price index basket, softened last month. But the bulk of the slowdown has come from lower international prices and less impact of government intervention to ease import duties and restrictions on wheat exports.
near term inflation outlook This year’s monsoon remains highly uncertain as the uneven nature and weakening rupee currency could reduce the effectiveness of those government efforts to contain consumer price hikes.
A Reuters poll of 48 economists in August 2-9 showed inflation, as measured by the Consumer Price Index (CPI), fell to an annualized 6.78% in July, from a five-month low of 7.01% in June.
The forecast for the data ranged from 6.40% to 7.10%, which is due at 1200 GMT on 12 August.
“Food and energy prices are essentially easing quite modestly, even though the rupee has hit historic lows in recent weeks,” said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.
“It (inflation) may remain sticky over the next few months, but it is not going to get worse than where we are currently.”
wholesale price inflation The survey showed that it declined to 14.20% in July, from 15.18% in June.
While cuts in fuel taxes helped ease price pressures to some extent, consumer price growth is expected to continue at a faster pace in the coming months.
India’s central bank, a relative laggard in a global tightening cycle, on Friday raised interest rates by 50 basis points to 5.40%, taking it above where it was before the pandemic, with more rate hikes expected.
Governor Shaktikanta Das has warned that persistently high cost of living conditions could translate into higher wages and inflation, which are unlikely to fall within the top end of the mandated target band by December.
This is broadly in line with a separate Reuters poll in which inflation remains above target until early next year.
Mitul Kotecha, Head of Emerging Markets Strategy, TD Securities, said, “We expect the RBI to continue to hike rates over the next few months. We expect at least a 25bp hike in September, followed by a 25bp hike in December 2022. are supposed to.” Risks quoted by Das wherein inflation remains above the target band for a few more months.