Inflation likely to rise from here as food prices remain key risk: Experts
Retail inflation in India is projected to increase in upcoming months. Food prices are the primary driver, though inflation should stay below six percent. Analysts anticipate the Reserve Bank of India will maintain its current policy stance. Supply-side factors like tomato and onion costs are influencing current price increases. Geopolitical easing could lead to inflation undershooting official…
India's retail inflation is projected to increase from the present levels in the upcoming months, mainly due to rising food prices, according to experts. The Retail Inflation, which rose to 4.45% in July from 4.38% in June, is expected to stay below the Reserve Bank of India's (RBI) 6% upper tolerance limit, as per analysts. Food inflation, measured by the Consumer Food Price Index (CFPI), increased to 5.52% in July from 5.32% in June, with rural food inflation at 5.79% and urban food inflation at 5.05%.
Vikram Chhabra, Senior Economist, 360 ONE Asset, stated that while inflation is likely to edge up from current levels, it should remain below the RBI's upper tolerance band of 6%. Debopam Chaudhuri, Chief Economist, Piramal Group, believes that the rise in retail inflation during July was driven by supply-side factors such as tomatoes and onions, transport costs, cooking fuel, and restaurant prices, which are expected to be temporary rather than indicative of stronger underlying demand.
Aditi Nayar, Chief Economist, ICRA Ltd, anticipates CPI inflation to average 5% in FY2027, with geopolitical tensions in West Asia and monsoon outturn posing risks to the upside. Rajeev Sharan, Head of Research, Brickwork Ratings, predicts headline inflation to average around 4.5-4.7% for Q2 FY27, with a mild uptick likely in September due to less favorable base effects.
Food prices are expected to remain the main factor influencing inflation in the coming months as uneven monsoon and El Nino-related uncertainty prevail.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
