Expert Views: India’s July retail inflation at 6.93%

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August 13, 2020

India’s annual retail inflation rose to 6.93% in July, as food prices continued to soar due to disrupted supply chains, government data showed on Thursday.

July inflation was higher than the 6.15% forecast in a Reuters poll of analysts.

COMMENTARY

RUPA REGE NITSURE, GROUP CHIEF ECONOMIST, L&T FINANCIAL HOLDINGS, MUMBAI

“The CPI print is along expected lines and justifies in retrospect the RBI’s decision to take a pause in the rate reduction cycle.”

“RBI has been supporting the system by using appropriate tools like liquidity and restructuring facility. Given the distortions in supply chains and transportation, I don’t expect a rate cut in the remaining part of 2020.”

“Liquidity support will, however continue and prevent a sharp reversal of benign interest rates.”

SUVODEEP RAKSHIT, SENIOR ECONOMIST, KOTAK INSTITUTIONAL EQUITIES, MUMBAI

“CPI inflation at 6.93% was much higher than consensus estimates, led by higher food inflation. Clearly, supply chain issues have been feeding through the food prices, especially vegetables and partly from higher fuel prices.”

“The magnitude was a surprise though the direction was broadly expected. However, over the next few months, food prices should normalise though seasonally food prices do see some uptick in the June-September period.”

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“In terms of the monetary policy, the RBI MPC is likely to remain on pause in the October policy meeting and will reconsider once inflation moves firmly below the 6%-mark and steadily declining towards 4%.”

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

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Expert Views: India’s July retail inflation at 6.93%

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