Retail inflation slows to its lowest level ever in the month of May. Consumer price index (CPI) drops to just over 2 percent as food prices contract over 1 percent and vegetable prices shrink over 13 percent. Industrial output picks up pace in April to clock a 3.1 percent growth rate.
In an interview to CNBC-TV18, A Prasanna, Chief Economist at I-Sec PD shared his views and readings of the inflation data.
“Market has already started pricing in a rate cut after the June policy. We expect the next two readings also to be sub-2 percent,” he said.
Prasanna expects the Reserve Bank of India (RBI) also to lower their March forecast to around 4 percent.
There will be expectations of 50 basis points (bps) cut building up in the market, he added.
He further said, that excess of anything is a problem, whether it is inflation or deflation.
Prasanna believes that there is some recovery after the slowdown which occurred because of demonetisation because the overall index of industrial production (IIP) number is better than FY17.
For full interview, watch video...
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