with retail inflation Cooling 7.04 per cent in May as compared to 7.79 per cent in the previous month, experts believe inflation in this quarter could be lower than RBI’s estimate of 7.5 per cent due to duty cuts, restrictions on wheat exports and impact of normal monsoon . , He said high-frequency mandi prices show some respite in the gradual gains so far, and policy interventions should limit the possibility of a sharp jump in prices of staples such as potatoes, onions and tomatoes.
According to the latest official data, retail inflation came down slightly to 7.04 per cent in May. Core CPI inflation fell to 6.2 per cent in May. In April it was at 7 per cent. Food inflation declined marginally to 7.97 per cent in May from 8.38 per cent in April. Fuel and light inflation eased to 9.54 per cent in May from 10.80 per cent in April. Inflation in vegetables, however, rose to 18.26 per cent in May from 15.41 per cent in April.
Sunil Kumar Sinha, Senior Director and Chief Economist India Ratings and Research said duty cuts, restrictions on wheat exports and the impact of normal monsoon may provide some relief on the inflation front. “India Ratings and Research, however, expects retail inflation to remain above 7 per cent in June 2022 as well.”
On commodity prices going forward, Madhavi Arora, Principal Economist, Emkay Global Financial Services, “High-frequency mandi prices show some respite in sequential gains so far. On the other hand, policy interventions to regulate exports have helped cereal prices, which, along with a modest MSP hike, should limit the possibility of a sharp jump in staple prices.
Arora said some reduction in import duty on some imported food products and easing of global vegetable oil prices will help bring down domestic edible oil prices in the coming months. “RBI expects CPI to average 7.5 per cent in the current quarter, which is slightly higher than our estimate at present.”
Last month, the government waived off customs duty and agricultural infrastructure development cess on 20 lakh metric tonnes of annual imports of crude soybean and sunflower oil to reduce domestic prices.
A rise in crude oil prices and a weakening rupee could pose risks to the inflation rate. Brend crude oil futures on Tuesday rose $1.05, or 0.9 per cent, to $123.32 a barrel on fears of further global supply.
The rupee on Monday lost 11 paise to close at a new high of 78.04 against the US dollar. However, it rebounded from its all-time low against the US dollar in early trade on Tuesday, with a gain of 2 paise to 78.02.
Aditi Nair, Chief Economist, ICRA said, “The double whammy of crude oil price hike and INR depreciation poses risks to the June 2022 CPI inflation print, even with the expected pace in services inflation in May. Despite being less, 2022 offers some relief.”
wholesale price inflation It hit a record high of 15.88 per cent in May on rising food prices and crude oil prices. Inflation based on the Wholesale Price Index stood at 15.08 per cent in April and 13.11 per cent in May last year.
according to a RBI SurveyIn the regular round of the survey, before the cut in excise duty on petrol and diesel, households’ three-month ahead expectation and one-year ahead inflation expectation were 10.8 percent and 11.1 percent. However, in another round of the survey (May 24-28) after the excise duty cut, households’ three-month forward expectation and one-year ahead inflation expectation stood at 8.9 per cent and 10.1 per cent.
On May 21, the central government had cut excise duty on petrol by Rs 8 per liter and on diesel by Rs 6 per liter. Later, several states including Kerala, Rajasthan and Maharashtra followed suit by slashing the value-added tax.
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