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regular-article-logo Tuesday, 05 November 2024

Inflation to stay elevated for few months until Centre's supply-side measures come into effect

Retail inflation in July had come as a shocker as it spiked to 7.4 per cent

Our Special Correspondent Mumbai Published 17.08.23, 09:48 AM
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Economists feel that headline CPI inflation is likely to stay elevated for a couple of months after which it will moderate due to supply-side measures undertaken by the government. The RBI is expected to stay in pause mode with the central bank watching out for any signs of inflation getting generalised.

Retail inflation in July had come as a shocker as it spiked to 7.4 per cent.

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Brokerages, however, feel that while the rise in inflation is transient, the country may have to face ugly numbers again for August and September, after which it could cool down.

“We are currently tracking August inflation at 7.5 per cent led by continued upside risks for perishable food prices. The sharp sequential uptick in food-led (specifically perishables) inflation could continue till September, although various control measures are being enacted,” economists at Emkay said in a note.

“Tomatoes are being imported from Nepal to ease the supply crisis, while the government is also releasing onions from the buffer stock and has already announced significant imports of tur dal this year,’’ Madhavi Arora and Harshal Patel at Emkay added.

According to a Crisil note, though the food price pressures are likely to be transient, they are expected to stay for a couple of months more.

Stocks recover

The Sensex on Wednesday fell 369 points intra-day as the retail inflation spike upset investors.

However, the market found some relief as the likelihood of this inflation-surge being transitory alleviated concerns.

In volatile trade, the 30-share BSE Sensex climbed 137.50 points, or 0.21 per cent, to settle at 65539.42 in the end.

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