Inflation likely eased in August

livemint.com:

NEW DELHI : India’s retail inflation likely eased to 7% in August from July’s 15-month high of 7.44% as vegetable prices cooled off from recent highs, according to the median of estimates by 18 economists in a Mint poll. However, this will still be the second straight month when inflation will be above the critical 6% mark. The poll predicts consumer price inflation (CPI) will range between 6.8% and 7.3%, with six economists giving the 7% figure, and only four seeing it lower.

Official data will be released on 12 September. Vegetables are expected to be one of the largest contributors again as prices were significantly higher than last year despite some sequential easing. “We expect vegetable inflat-ion to continue to be the largest contributor for a second month in a row, as prices of tomatoes remained elevated, while prices of onions also rose (sequentially)," said Rahul Bajoria, an economist at Barclays, in a report dated 6 September.

The sharp rise in vegetable prices had led to a surge in inflation last month, which forced the government to take policy measures such as export ban on onions and sale of tomatoes and onions at cheaper rates. Vegetables account for 6% of the CPI basket and food nearly 40%. While 45% of the food items for which high-frequency data is available saw their prices ease on a month-on-month basis in August, prices of over 60% continued to increase on a year-on-year basis, according to a report by DBS Bank dated 5 September.