Food inflation easing could be a temporary relief; inflation remains key risk for any economy: Devendra Pant
Devendra Pant, Chief Economist, India Ratings, says food inflation is cooling off but there are two commodities which could be another source of problem for food inflation in general and your overall inflation in particular. In August ‘24, oil and fats had a deflation of 0.86% and come November it has an inflation of 13.28%. This is one commodity among the food group which can create a problem in the months to come.
Now that food prices are softening, do you think they will remain elevated still or do you think this is a temporary relief, a trend perhaps that could sustain? Which one of these do you think it is?
Devendra Pant: There will be a relief because generally what happens is when you are entering the winter season, you see the kind of price movement in the vegetables or the fruits, they tend to ease because what happens is either you have the less rainfall or more rainfall and because of that there are some supply shortages.
We have seen that historically food inflation cools off. But there are two commodities which could be another source of problem for food inflation in general and your overall inflation in particular, which is building up and which had deflation till August. On August 24, oil and fats had a deflation of 0.86% and come November it has an inflation of 13.28%. So, this is one commodity among the food group which can create a problem in the months to come.
Do you think this kind of data could see the RBI moving towards the 25 basis points rate cut in February under the new governor?
Devendr
