May inflation number on expected lines, say experts

In an interview with CNBC-TV18, Indranil Pan, chief economist at Kotak Mahindra Bank and Siddhartha Sanyal, chief economist (India) at Barclays Capital, spoke about their reading of the May inflation number and their outlook for the economy.

Below is a verbatim transcript of the interview. Also watch the video.

Q: Would you want to now redraw your trajectory of inflation altogether?

Pan: Not actually because we have been factoring in a lot of these upsides on the manufactured side. The broad range for us is 8.5% to 9% for a significant period of time and significant upsides to that would possibly be coming out of the oil price adjustments domestically.

Let us remember that some amount of commodity price softening has happened and that would be filtering into the industrial segment for India only in around June because there is always a lag effect between the commodity prices slackening globally and the domestic effect.

Q: Would you want to now perhaps tweak your inflation index and your projection even further? Do you think that the Reserve Bank has more than just two rate hikes now?

Sanyal: We were in any case factoring in some kind of high number like this. In the current release, there had been two important takeaways for me from the headlines. 1) The current numbers surprises on the upside. 2) One soothing factor is that the March revision, though it