India inflation eases significantly in August. Is the worst behind?
RBI) and bond investors even though it remained above the RBI's target range of 2-6 per cent. As Mint reported earlier, quoting data released by the Ministry of Statistics and Programme Implementation (MoSPI), food inflation, measured by the Consumer Food Price Index, which accounts for nearly half of the overall consumer price basket, slowed to 9.94 per cent in August from 11.51 per cent in July. Core inflation at 4.8 per cent remained in line with the market’s expectations.
Read more: Retail inflation slows to 6.83% as vegetable prices decline In July, retail prices in India went up by the most in 15 months, which worried investors. This increase in prices could lead central banks to use stricter monetary policies, which might harm economic growth. A fall in retail inflation is a significant relief but experts think it is early to say that the worst is behind.
G. Chokkalingam, Founder and Head of Research at Equinomics Research underscored the sharp rise in crude oil prices and poor monsoon. They could derail RBI's efforts to curb inflation.
"We cannot say the worst is behind. Yesterday also the oil price was up 2 per cent. Late rain in September is believed to be impacting pulse crops.
I still believe that inflation could be a cause of worry in the short term," said Chokkalingam. Madhavi Arora, Lead Economist at Emkay Global Financial Services said while non-perishables are showing signs of persistence, overall food inflation is likely to reverse meaningfully. She added that crude oil price trajectory and the progress of the monsoon remain key monitorables.
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