July inflation expected at 7.25%: CNBC-TV18 Poll

Latha Venkatesh, banking editor, CNBC-TV18, shares her view on the inflation data which will be released later in the day. According to a CNBC-TV18 poll, July inflation number may come in at 7.25%.

Venkatesh says that if the inflation number indeed comes at 7.25%, it will be a bad number because it will mean that month-on-month the inflation level would have risen by about 0.67% whereas in the month of June it had risen only by 0.2% over May. So 7.25%, on year-on-year basis look similar to June. We expect the number to be below 7.25%. Why is it expected to be so powerfully higher than what June was? Because there is an expectation that food inflation will spike up. The realization of drought sank in better in the month of July especially in the closing week and that is expected to have pushed up food prices considerably and therefore we will have a food price index growth which will be closer to 11% may be 10.7% compared to 10.25% in the previous month. Likewise, even industrials may not show the same mellow price level that they showed in June because we did see some creeping up of international prices after a very subdued June and all this put together is likely to give us a 7.25% number. It is not expected to steer the RBI into action because previous number was also 7.25%, it didn't bring forth any action from the RBI, why should the July number bring forth any action. So it will largely be taken as negative but my sense is it is in the price. So we may not see any major downside in bond or stock prices.