See CPI at 7.5-8% for current year: YES Bk's Shubhada Rao

India's annual consumer price inflation slowed for the second straight month in April to 9.39 percent, government data showed on Monday.

Consumer prices rose an annual 10.39 percent in March. Food prices for consumers rose an annual 10.61 percent in April, slower than an annual rise of 12.42 percent in March. In an interview to CNBC-TV18, Shubhada Rao of Yes Bank spoke about her reading of the inflation numbers and her outlook. Also read: CPI inflation slows to 9.39% in April Below is the verbatim transcript of her interview to CNBC-TV18 Q: Is 9.39 percent better than you thought? A: Definitely. We were looking at close to 10 percent that is 9.9 percent or thereabouts was our rough anticipation. It is a 13 month low which is a strong positive. Month over month also it looks to have declined at about 0.47 percent. This is better than the earlier 2-3 months that we were looking at 0.63 and 0.56 in January-February onwards so clearly, a positive number. More importantly, we have the retail that has driven this number to this lower level. Our concern was on the service sector inflation because a lot of surplus is coming out in the open and that constitutes to a lot of services component within the consumer price Index (CPI). That is what is awaited in terms of retail. Q: What do you expect in terms of a trajectory going forward? Do you expect CPI to soften further? What do you think could be the reason why it would if any case that is your assumption? A: The first and foremost point to be noted is, typically CPI lags wholesale price index (WPI) by a good 3-4 months, if one looks at the past history. Seeing the WPI trajectory getting lower, I think our own anticipation was that definitely CPI would track it with a bit of lag. But probably this lag has got a little bit shorter and that is the reason why we see in this month of April, CPI inflation having come in at so much lower. The important point is how do we see this trajectory? I think there would be support no doubt about it. If we assume monsoons to be normal that would provide a significant support for easing consumer inflation. We would wait for the actual performance but at this point in time tentative ballpark number for CPI stands somewhere close to 7.5 to 8 percent for the year. To add one more point, 7.5 percent to 8 percent is assuming that wae do not see a very significant ramp up things in minimum support price (MSP). MSP as we all know has been giving a kind of a higher floor to the food prices. A lot of states might go into election if MSP continue to rise and then one could see food inflation not easing as much as we had earlier.