Comments
Retail inflation is expected to average 4.4 per cent this financial year, up from 3.6 per cent recorded in the last fiscal, says a report. According to Kotak Economic Research, CPI inflation is expected to remain at the sub-5 per cent level but uncertainties on the domestic and global front could impact its trajectory.
“We expect CPI inflation to stay broadly capped at 5 per cent in FY2019,” Kotak Economic Research said in a note, adding, “we expect CPI inflation to average 4.4 per cent in FY2019 (3.6 per cent in FY2018)”.
The factors that are likely to impact the inflation number going forward include volatility in the global financial markets, oil prices, MSP pass-through and the staggered impact of HRA increases by states. The report further noted that stable crude oil prices and partial pass-through of MSP on inflation is less of a concern in FY2019.
On the Reserve Bank’s policy stance, the report said the RBI is expected to remain on hold through the rest of this financial year. “While the growth-inflation dynamics and the assessment of monetary policy transmission may keep the MPC on hold through the rest of FY2019, we remain watchful of INR depreciation on the back of the ongoing emerging market meltdown in financial assets,” it said.
Moreover, a consistent depreciation in the rupee may warrant unconventional measures by the RBI, including further rate hikes, the report noted. The rupee has been among the worst-performing currencies against the dollar compared with its peers so far this year and breached the 70-mark against the American unit in intra-day trade on August 14 amid global uncertainties and concerns over inflation.
In the August policy review meet, the six-member MPC headed by RBI Governor Urjit Patel for the second time in two months raised the interest rate by 0.25 per cent on inflationary concerns. The next meeting of the MPC is scheduled on October 3-5, 2018.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.