Retail food prices, which make up nearly half of India's inflation basket, increased 5.11% in September from a year earlier, compared with 2.99% in August.
The DA hike for government employees comes at a time when their private counterparts find it tough to convince their employers for a parity of treatment.
An extended monsoon has delayed harvests and interrupted the supplies of vegetables like onions, a key ingredient in Indian kitchens. That probably pushed retail inflation higher last month; food prices account for over half the inflation basket.
However, the price of onions has come down marginally compared to past week and is now hovering around Rs 60 per kg in the national capital.
Inflation expectations of households have risen somewhat. However, given the weak domestic demand, and lower input costs, inflation in CPI excluding food and fuel is likely to remain moderate
The announcement of macro data such as IIP for July month and CPI & WPI for August month will provide direction to the markets.
Prices of other key vegetables such as peas, cauliflower and beans have also surged sharply as heavy rains damaged crops in both these states and the neighbouring Himachal Pradesh.
The Consumer Price Index (CPI)-based retail inflation data captures changes in shop-end prices and is the main metric that RBI tracks to decide on interest rates.
In the conventional policy design, multiples of 25 bps gives financial markets visibility about near term moves since the pattern is tried and tested. However with this move, multiple possibilities open up for the next rate cut whenever it happens.
While the rate cut and the awaited improvement in transmission of monetary easing to bank lending rates would boost sentiment, some of the constraints to economic growth may not be removed by lower interest rates alone — this must be supplemented with policy changes and reforms aimed at spurring activity in various sectors.
The central bank reiterated its objective of achieving its 4 percent CPI inflation target, within a band of +/- 2 percent, while supporting growth
Signs on the ground don’t point to a meaningful growth recovery. With prices posing no immediate threat, RBI has its task cut out.
While a rate cut by itself will not solve sector specific issues, a rate cut along with the right communication and cues on liquidity could go a long way in boosting confidence given the current context.
You need to counterbalance currency risk with gold
If higher diesel prices push up the cost of vegetables in the rainy season, inflation may be affected later
Inflation rate in cereals and products stood at 1.3 percent in June as against 1.24 percent in May while vegetables inflation stood at 4.66 percent in June as against 5.46 percent in May.
Post the rise in fuel taxes announced by the government in the Budget for 2019-20, petrol and diesel prices rose by at least Rs 2.4 and Rs 2.36 a litre respectively across metro cities.
India’s gross domestic product (GDP) grew 5.8 percent in January-March, official data released on May 31 showed, confirming fears of a slowdown.
The Economic Survey said that headline CPI stood at 2.9 percent in April 2019, compared to 4.6 percent in April 2018. Food inflation based on Consumer Food Price Index (CFPI) fell as low as 0.1 percent during the financial year 2018-19
Rainfall during the June-September season accounts for about 70 percent of India’s annual rainfall and is key for the country’s $2.5 trillion economy.
We all know how the inflation targeting framework set the gold standard to bring prices down. To stretch it a little further, why not apply it to break the back of the NPA problem? Over to RBI
Priyanka Sahay gets in conversation with Gaurav Choudhury to find out about the reasons for this spike.
The government must create a balance between keeping the consumer prices under check and ensuring remunerative prices to all farmers.
India’s retail inflation for May inched up to 3.05 percent—7-month high—from 2.92 percent in April