Thursday, August 18

India’s June retail inflation accelerates to 7.01% y/y


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BENGALURU — India’s annual retail inflation accelerated to 7.01% in June from 6.26% a year earlier, and remained above the central bank’s tolerance band of 2%-6% for the sixth month in a row, government data released on Tuesday showed.

Analysts in a Reuters poll had predicted annual inflation of 7.03% in June compared with 7.04% in the previous month.

COMMENTARY

GARIMA KAPOOR, ECONOMIST — INSTITUTIONAL EQUITIES, ELARA CAPITAL, MUMBAI

“Upside risks to India’s inflation appear to be easing as global commodity prices correct amid concerns over the global slowdown and as the rise in domestic food prices begins to ebb.

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“With today’s print, Q1FY23E CPI inflation is undershooting RBI’s projected inflation of 7.5% by 22 bps. We see incremental upside risks to CPI inflation easing off, with FY23E CPI at 6.5% with risks balanced vs earlier expectations of upside risks of 20-30 bps.

“We see the Monetary Policy Committee (MPC) take comfort from these data points and expect another 75 bps hike in the policy repo rate in FY23E with a 25-35 bps rise during the August 2022E meet.”

UPASNA BHARDWAJ, CHIEF ECONOMIST, KOTAK MAHINDRA BANK, MUMBAI

“The CPI inflation broadly remained steady around 7% bringing the 1QFY23 average to 7.3%, marginally lower than RBI’s projections of 7.5%. Nonetheless, inflation is expected to remain elevated with only a gradual descent through the rest of the year.

“Commodity prices provide some relief, the gains will be limited due to the weakening rupee. We expect the MPC to continue to frontload policy rate hikes especially as global monetary tightening continues. We expect 85-110 bps of additional rate hikes in the coming few meetings to bring the Repo rate towards 5.75-6% by end of FY23.” (Reporting by Rama Venkat in Bengaluru; Editing by Vinay Dwivedi)



financialpost.com