Expert Views: Consumer inflation accelerates to 3.36 percent in August

Expert Views: Consumer inflation accelerates to 3.36 percent in August

Last Updated: Tue, Sep 12, 2017 18:33 hrs
An employee works inside a steel rerolling mill at Chitra industrial area in Gujarat

MUMBAI: India's annual consumer inflation in August jumped to a five-month high of 3.36 percent from a year ago, driven by higher food prices, according to government data on Tuesday.

The rise was higher than the 3.20 percent forecast by economists in a Reuters poll. Inflation rose to 2.36 percent in July, after falling for three straight months.

COMMENTS

SHUBHADA RAO, CHIEF ECONOMIST, YES BANK, MUMBAI

"Apart from food and fuel all other factors contributed to the month-on-month increase in inflation with housing driving the rise.

"Overall inflation is walking along the indicative path with no unanticipated surprise shocks on the upside expected.

"Core inflation has gone up due to the government salary hikes which have started to seep into the housing index.

"It is critically important that the food economy is managed so that overall CPI remains in control. We do not expect any rate cuts in October."

ASHTOSH DATAR, ECONOMIST, IIFL INSTITUTIONAL EQUITIES, MUMBAI

"Inflation data is higher than my estimate for sure. Food has driven (it) up, as expected"

"A rate cut can be expected before the end of this year if the core inflation has not risen. But (the repo rate) will be on hold if it has risen."

"Will stick to FY18 average CPI estimate of 3.5 percent for now."

"For inflation projection going ahead, the main risk is food inflation and how it shapes up given the extremely low levels we have currently."

HITESH JAIN, SENIOR RESEARCH ANALYST, IIFL WEALTH MANAGEMENT, MUMBAI

"We're going to see a spike in most food commodities in the next two to three months, which will lead to a rise in overall headline inflation. It is very much in line with RBI expecting inflation to move higher.

"There's no major inflation risk as industrial commodities prices have moved higher, oil still remains low and food inflation will move higher. I think the overall headline inflation will not breach the overall tolerance level of RBI.

"We are of the opinion that RBI will not deliver any rate cut this calendar year."

ANJALI VERMA, ECONOMIST, PHILLIPCAPITAL INDIA, MUMBAI

"I think there were still a few people who were expecting rate cuts to come through. But I think with this (data), it may not happen.

"We are maintaining that there is no scope for further rate reduction. Core CPI going ahead is going to be 4 percent-plus. We are looking at a range of 4-4.5 percent.

"The main risk points one needs to watch out for inflation projections going ahead are largely fuel and commodity prices."



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