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Inflation may top government estimates, set to test RBI target

FE Online
CPI inflation

Even as retail inflation remained down for five fiscal years now, it is expected to rise in FY19, report said. The headline inflation may climb 60 basis points to 4 per cent this fiscal from 3.4 per cent in fiscal 2019, CRISIL report said. The food inflation may rise to 3 per cent from abnormal low of 0.1 per cent. On a sequential basis, the rise in food prices may generally remain muted owing to well-distributed monsoon. Even the IMF and World Bank have projected fall in prices this year, the report noted. The report further stated that RBI s medium-term inflation target of 4 per cent can only be met if food prices remain subdued. The inflation targeting of the central bank has coincided with lower inflation and its volatility, it added.

Meanwhile, an analysis by The Indian Express said that even as inflation wasn t a major issue these elections, it may turn out to be a serious challenge for the next government at the helm of affairs. The prices of farm commodities have risen significantly in the parts of western and southern India and severe summer conditions, it said. Under Modi government s five year rule, the prices of food items generally remained subdued, with consumer food inflation remained below the retail inflation from September 2016 to March 2019.

Also read: Rising tomato, onion, milk prices to be first test for next govt, even as inflation not election issue

Compared to the year ago period, the prices of farm commodities such as jowar, bajra, kapas, tomato, onion and cotton have climbed, the analysis added. Similarly, the costs of ingredients of cattle feed have also increased as against the corresponding period of the last year.R S Sodhi, Managing Director, Gujarat Co-operative Milk Marketing Federation told The Indian Express said that it may also led to rise in prices of milk.