Inflation for week-ended April 26 is at 7.61% versus 7.57%. The market had estimated it at 7.60%. A poll conducted by CNBC-TV18 had estimated it at 7.6%.

Gaurav Kapur, Senior Economist, ABN AMRO Bank feels that there would be some respite for now. All the action that has been taken by the government is likely to show some result and it is really showing some kind of effect in the momentum, he told CNBC-TV18. 

However, Mridul Sagar, Chief Economist, Kotak Securities is not too sure about how inflation would pan out from here. "One, the way we look at base effect is fine; I mean some relief may come from there. But the alleviated prices last year would also mean that probably you will continue to have inflation through the year," he said.

Both Kapur and Sagar see inflation touching 8% this year.

RVS Sridhar, Senior VP-Treasury, Axis Bank does not expect to see much of a reaction from the bond market side based on the inflation numbers right now.

Excerpts from CNBC-TV18’s exclusive interview with Gaurav Kapur, Mridul Sagar and RVS Sridhar:

Q: Inflation at 7.61%, would you say that the worst is over at least for the next one month or so?

Kapur: I think so. I think at least for the next two weeks certainly with a favourable base effect of almost 40 basis points, it seems that the momentum that we have seen in prices is perhaps behind us for the momentum. So, things are stabilising. But that is a short-term respite because globally particularly oil prices are moving up and come June-September quarter, we typically see prices going up than any other quarter in the case of India during the fiscal year.

So, I think for the moment, there is some respite. All the action that has been taken by the government is likely to show some result and I think it is really showing some kind of effect in the momentum. 

Q: What are you are expecting in terms of the play out in May? Do you think we have sent the worst for now and we can look forward to a sub-7% very soon?

Sagar: Well I do hope this turns out to be correct, but I am not too sure about how inflation would pan out from here. One, the way we look at base effect is fine; I mean some relief may come from there. But the alleviated prices last year would also mean that probably you will continue to have inflation through the year.

Also, the fact remains that adjustment of prices has not really taken place completely. There is a lot of pass through that is still to occur in the Indian economy. Now it is up to administrative policies on how this pass through is going to take place.

Global commodity prices have shot up like anything since 2004 and particularly last year. The pass through is lagging behind considerably for most of the commodities not just oil, but even fertilisers for instance.

Q: When international crude prices are at USD 125/bbl, a lot of manufactured items will reflect that in the months to come. The pass-through may not happen in terms of domestic fuel prices and maybe to some extent limited in terms of domestic steel prices as well, but every important machinery and commodity is going to reflect that fuel price as well. How would you see inflation say two months down the line? I am harping on that because the RBI Governor as well as the government are banking on inflation moderating in 2-3 months. Do you think that can be realised given the way commodity prices have gone over the past two weeks?

Kapur: I think there are clearly two things. The government and the RBI have taken some fairly strong and severe steps particularly the government in trying to bring down inflation.

But as I was saying earlier, June-September is a period where I would think things could actually worsen from hereon before they improve. So, I would not be too optimistic on inflation coming down sharply especially considering the way oil prices are moving. As you pointed out, besides petrol and diesel prices that are largely government determined, there are other fuels that are linked to the price of crude oil. There are a number of other commodities that are linked to the price of crude oil, fertilisers for instances whose prices are linked to crude oil.

Similarly, I think as Dr. Sagar pointed out, the pass through is yet to be seen. I think in a number of commodities where the raw material cost for instance, steel costs have gone up. So, you have seen a hike in car prices. Similarly, I think the second round impact of the initial increase in raw material prices is yet to be seen.

Q: Nobody has been expecting a sharp fall in inflation like you have been saying. But do you think that the RBIs expectation of a general moderation will be realised? Very briefly put, in or before July, do you think they will have to take any rate or CRR action?

Kapur: I would not rule out a CRR action before July. I think inflation will not come to the comfort levels - we are looking to, certainly not by July or perhaps even a little later. So, I would not be surprised if they go ahead with a CRR hike.

Q: But you are not expecting rate action?

Kapur: Well, considering the RBIs preference for CRR at the moment, yes. But one can always be surprised. I was expecting a rate hike in April. But it has not happened. So, I would not rule that out either. But considering that RBI is preferring CRR at this point, I would think if anything that will be the first step of action.