India’s wholesale price inflation is most likely to speed up in the coming months of this year, suggesting that the Reserve Bank will avoid loosening up monetary policy any even more, Shilan Shah, an economic expert at Capital Economics, said.
Wholesale cost inflation accelerated to 3.2 percent in August from 1.9 percent in July, main information from the Ministry of Commerce & & Market showed on September 14.
The upward trend in August was mainly owned by a dive in food inflation, to 5.8 percent from 2.1 percent.
“A surge in the wholesale price of onions and tomatoes in the middle of current supply disturbances was the key factor behind this,” Shah observed.
Capital Economics’ step of core inflation also increased especially from 2.2 percent to 2.6 percent – its highest rate because November 2014.
Looking ahead, the WPI inflation will continue to rise in the near term, the financial expert pointed out.
Undesirable base results caused by the drop in food costs in the 2nd half of last year will press food inflation greater.
This, core rate pressures could pick up a little more over the coming months.
Wholesale price inflation is less essential for policymaking than CPI Inflation, the central bank is likely to take hearken of the rise in August.
“And with CPI inflation having actually also sped up last month, we think that the reserve bank will refrain from loosening up monetary policy any further,” Shah anticipated.
Capital Economics expects the repo rate to stay on hold at 6.00 percent over the next 12 months.
The material has been supplied by InstaForex Company – www.instaforex.com