has hit a three-year high and stands at 7% versus 6.68% for the week ended March 22. The market had estimated it at 6.52%. So, what do FIIs read into this figure?
, Senior Asian Economist, , said there is a chance that Wholesale Price Index, or WPI, inflation ought to be at least 8% over the next few months, even if oil and other commodity prices don’t continue to rise. “If they do peak, it will be somewhat higher than that. So, it is going to get worse before it gets better.”
He feels the risk is towards higher rates and WPI inflation numbers than the other way round. “A lot of these commodity prices are driven by normal fundamental factors. Speculative activity by its very nature is extremely hard to predict. I have come up with an 8% WPI forecast as commodity prices remain at the current levels. If they go higher then clearly WPI inflation is going to go higher and if they come lower then the reverse will be true.”
of said the biggest risk to emerging markets is inflation. “The world has been focused too much on what the Fed has been doing to help out America. They haven’t focused enough on the problems that this kind of monetary stimulus and commodity boost might cause emerging markets. Emerging markets have been on and off the big momentum trades over the last 3-4 years. With the US slowing, the commodity price inflation going through the roof. There are some very big risks there. What we don’t yet know in many emerging markets is how robust the inflation fighting mechanism is going to be and what kind of exchange rate policy might follow from that.”
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Inflation has hit a three-year high and stands at 7% versus 6.68% for the week ended March 22. The market had estimated it at 6.52%. So, what do FIIs read into this figure?
571.07 4.28%
