RBI strikes another blow in inflation fight

Source: The Hindu Business Line, Aug 01, 2018

Mumbai: The Monetary Policy Committee of the Reserve Bank of India on Wednesday decided to increase the repo rate by 25 basis points to 6.5 per cent, as it remained concerned about rising inflation.

“Consequently, the reverse repo rate under the LAF stands adjusted to 6.25 per cent, and the marginal standing facility (MSF) rate and the Bank Rate to 6.75 per cent,” the RBI said in its the third bi-monthly monetary policy statement.Though the prices remained below its estimated trajectory, the RBI has forecast retail inflation at 4.6 per cent in the second quarter of the fiscal, 4.8 per cent in the second half of the fiscal and five per cent for the first quarter of 2019-20.

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Inflation likely to average 4.7% this fiscal, RBI may tighten rates

Source: Business Standard, Jul 26, 2018

New Delhi: A good monsoon notwithstanding, inflation is expected to average 4.7 per cent in the current fiscal, up from 3.6 per cent last year and Reserve Bank of India is likely to tighten the key interest rates in the coming months, says a DBS report.

According to the global financial services major, good rains will support agricultural growth but a material respite to inflation will hinge on factors like oil prices, the value of rupee against the US dollar and fiscal dynamics.India’s southwest monsoon has recovered in the past week. Crop sowing activity is catching up, along with an improvement in the reservoir levels.

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WPI hits 54-month high, jumps to 5.77% in June

Source: The Hindu Business Line, Jul 16, 2018

New Delhi: The producer’s inflation zoomed to a 54-month high in June, Government data revealed on Monday. This inflation, popularly known as Wholesale Price Index (WPI), stood at 5.77 per cent in June as against 4.43 per cent for May.

WPI follows retail inflation (CPI), which rose to a five-month high of 5 per cent in June, while industrial production slipped to 3.2 per cent in May, Now, both key inflation indices are rising, and the possibility of the RBI’s Monetary Policy Committee considering another rate hike at its next policy meeting, is high. The committee is to meet under the Chairmanship of RBI Governor Urjit Patel early next month.

Aditi Nayar, Principal Economist at ICRA, said the lagged transmission of higher crude oil prices, an uptick in cotton prices and electricity tariffs, the hardening of inflation for manufactured products as well as an unfavourable base effect, led to a sharp pickup in WPI inflation. An unfavourable base effect as well as a revision in electricity tariffs, and prices of ATF, LPG, naphtha and furnace oil, contributed to the considerable rise in inflation for fuel and power to 16.2 per cent in June from 11.2 per cent in May.  Read the rest of this entry »

India June inflation likely reached highest level in nearly 2 years: Reuters poll

imagesSource: The Economic Times, Jul 10, 2018

Indian inflation likely rose to a near two-year high in June, driven by surging oil and food prices, a Reuters poll showed, a development that would strengthen calls for more monetary policy tightening by the Reserve Bank of India.

According to a July 4-9 Reuters poll of 37 economists, retail prices rose at an annual 5.30 percent last month. That would be the fastest since July 2016, well above May’s 4.87 percent and keep inflation above the central bank’s 4 percent target for an eighth straight month.

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India’s rural inflation has started pinching

Source: Financial Express, Jun 29, 2018

New Delhi: The Reserve Bank of India’s (RBI) unanimous call for a 25-basis-point rate hike after four years was primarily driven by the strengthening core inflation as well as the rising household inflationary expectations. Since the April Monetary Policy Committee meeting, there have been some significant macro developments, mainly on four counts.

First, the global crude oil prices have risen by about $10 per barrel. Second, the rupee has depreciated by almost 5%. Third, the three-month and one-month ahead inflationary expectations have risen by 90bps and 130bps, respectively. Fourth, core inflation has jumped by 50bps to 6% in May 2018 as compared to 5.5% in March 2018. Read the rest of this entry »

RBI may hike rates again in August on rise in inflation

download (4)Source: The Hindu Business Line, Jun 13, 2018

Mumbai: Headline inflation surging to a four-month high of 4.87 per cent in May is likely to force the Reserve Bank of India to hike rates once again at its August monetary policy review, analysts said.

The commentary comes a day after industry body, the Confederation of Indian Industry (CII), said monetary policy tightening will increase the cost of doing business and force India Inc to slowdown on investments, which are critical for pushing the growth agenda.

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Retail inflation for industrial workers softens to 3.97% in April

download (3).jpgSource: The Economic Times, Jun 01, 2018

Retail inflation for industrial workers eased to 3.97 per cent in April mainly due lower prices of food items.

“The year-on-year inflation based on CPI-IW (Consumer Price Index-Industrial Workers) stood at 3.97 per cent for April, 2018 as compared to 4.36 percent for the previous month (March 2018) and 2.21 per cent during the corresponding month (April 2017) of the previous year,” the labour ministry said in a statement. The CPI-IW is used for working out dearness allowance and dearness relief for central government employees and pensioners respectively.

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