HomeBusinessRetail Inflation Eases Marginally To 5.30% In August Over Cheaper Food Prices

Retail Inflation Eases Marginally To 5.30% In August Over Cheaper Food Prices

August Inflation Softer Than Expectation, Say Experts

Retail inflation fell marginally in August

Annual retail inflation eased to five.30 per cent in August from 5.59 per cent the earlier month, authorities knowledge launched on Monday confirmed.

Analysts in a Reuters ballot had predicted annual inflation at 5.60 per cent.

Here is what consultants say on August inflation numbers:

Sakshi Gupta, Senior Economist, HDFC Bank, Gurugram

“Inflation surprised on the downside in August compared to consensus expectations. The softness was led by lower food inflation, especially in cereals, sugar and vegetable categories. Core inflation also dropped below 6 per cent after remaining elevated for the last few months. Fuel inflation continued to play spoilsport at almost 13 per cent in the month.

“Inflation readings may stay contained for the following 2-3 months, partly supported by a excessive base, earlier than inching as much as 6 per cent from December onwards. For now, the sub-6 per cent print for a second consecutive month is prone to take the stress off the RBI to normalise liquidity simply but.

“We expect the central bank to start discussing any liquidity rollback only by the beginning of 2022.”

Sreejith Balasubramanian, Economist – Fund Management, IDFC AMC, Mumbai

“With the August print of 5.3 per cent, CPI (consumer price index)inflation has moved further down from its peak of 6.3 per cent in May and June, aided by softer prices of food and beverages and base effects. Core inflation remains elevated at 5.8 per cent y/y in August and an average of 5.9 per cent FYTD (financial year to date), but signs of a sustainable demand recovery apart from supply-side factors continue to remain important.

“The extent of manifestation of sequentially softer cereal and vegetable costs (based mostly on out there real-time knowledge to this point in September) in official CPI, sectoral provide changes, commodity costs, companies inflation, and so forth. might be essential forward.”

Suvodeep Rakshit, Senior Economist, Kotak Institutional Equities, Mumbai

“CPI inflation at 5.3 per cent in August is according to expectations and must be seen positively by the RBI (Reserve Bank of India). Core inflation has additionally softened from final month.

“We expect the RBI MPC (Monetary Policy Committee) to remain focused on growth as inflationary concerns remain under check.”

Upasna Bhardwaj, Senior Economist, Kotak Mahindra Bank, Mumbai

“The headline inflation came in softer than our expectations largely led by downward surprise of food prices. We expect the subsequent readings to remain fairly benign and much lower than RBI’s estimates.

“The softer inflation would offer reduction to the coverage makers and extra room to maneuver a lot slowly when it comes to coverage normalisation. We proceed to count on solely tweaks to liquidity instruments to handle short-term liquidity surplus within the close to time period.”

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