July retail inflation may hit 6-mth high of 6.5%: Poll

livemint.com:

Mint poll of 19 economists. The poll predicts consumer price inflation (CPI) in the range of 5.5-7.5%, with all but two economists expecting inflation to exceed the Reserve Bank of India’s upper tolerance limit of 6%. Official data is scheduled to be released on 14 August.

“The spike in vegetable prices is set to push the July CPI inflation well above the MPC’s 6.0% upper threshold," said Aditi Nayar, chief economist at ICRA Ltd. “The subsequent rise in prices of various other food items suggest that the CPI inflation will revert below 6.0% only by September 2023," she added. Since March, inflation has stayed under the 6%-mark, even dropping to a 25-month low of 4.3% in May, before rising again from June.

Vegetables, which account for 6% of the CPI basket, are known to impart volatility to headline inflation. While economists expect vegetable prices to correct by September, the global weather phenomenon El Niño remains an upside risk to the inflation outlook in the coming months. Given the uncertainty around food prices, the RBI has revised its inflation forecast for the fiscal year 2023-24 to 5.4% from 5.1% previously, and projected inflation to average 6.2% in July-September at its meeting concluded on 10 August.