Comments on CPI inflation announced today by Dr. Manoranjan Sharma, Chief Economist, Infomerics Valuation and Rating Limited
Below the Comments on CPI inflation announced today by Dr. Manoranjan Sharma, Chief Economist, Infomerics Valuation and Rating Limited
India’s August retail inflation of 4.82%—up from 4.45% in July—marks a third consecutive reading above the RBI’s 4% medium-term target. This shows that price pressures have become entrenched rather than a one-month aberration, making the RBI’s policy trade-off difficult.
The sharper rise in food inflation to 5.95%, from 5.52% in July, is worrisome since food has a large weight in household consumption, especially for poorer and rural households, so the headline number understates the loss of purchasing power faced by those whose expenditure is concentrated in essentials.
Although 4.82% is within the RBI’s statutory 2–6% tolerance band, the uneasy mix of accelerating food prices and prior evidence of firming core inflation narrows room for monetary easing; policy must distinguish temporary weather- and supply-driven food shocks from broader demand and fuel-cost spillovers before treating the rise as a case for higher interest rates.
Above views are of the author and not of the website kindly read disclaimer
