: India’s inflation worries are not over even if the future looks a little brighter #IndiaNEWS India’s central bank may have brought down inflation worries, but price pressures could potentially

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India’s inflation worries are not over even if the future looks a little brighter #IndiaNEWS
India’s central bank may have brought down inflation worries, but price pressures could potentially re-emerge soon.On October 8, the Reserve Bank of India lowered the inflation forecast to 5.3% for the ongoing financial year from its earlier estimate of 5.7%. “The CPI [Consumer Price Index] headline momentum is moderating with the easing of food prices which, combined with favourable base effects, could bring about a substantial softening in inflation in the near-term,� RBI governor Shaktikanta Das said.India’s consumer price inflation has remained higher than the RBI’s comfort level of 2% to 6% for six out of the past 12 months. In July, it came down to 5.59% and further down to 5.30% in August.High inflation in edible oils, fuel, liquified petroleum gas and medicine are significantly influencing consumer prices.“Certainly, fears of a nasty inflation shock have receded at the margin because India’s [CPI] forecasts are lower when the global [crude] prices are going up,� said Rahul Bajoria, chief India economist at Barclays Bank.However, while the central bank has projected inflation at 5.2% in the next financial year, its estimates show that consumer prices may heat up by the March quarter.What fuels inflation?A surge in food inflation is often cited as a reason for higher overall inflation in India....Read more

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