Headline inflation came in higher than expected at ~7.6% YoY in August on account of a pick-up in agri-prices (oilseeds, pulses etc), a sharp revision in electricity tariffs (unchanged since late last year) and a rise in manufactured product inflation especially food products, fertilizers, and cement. Indeed, core inflation too picked up during the month to 5.6% from 5.4% previously, which is worrying and needs monitoring. Persisting input cost pressures (high energy and agri-prices) seem to be spilling over to manufactured products and a hike in diesel prices could further reinforce this trend. Accordingly, headline inflation is likely to climb up in the coming months before trending down towards the year end.
As regards the monetary policy, despite the favourable move on fuel prices, we expect a status quo on policy rates in the forthcoming RBI meeting.
Regards,
No comments:
Post a Comment