India’s consumer price inflation is expected to have eased significantly in
August following a sharp rise in the previous month. CPI inflation is likely to
have slowed to 5 percent year-on-year after reaching a 23-month high of 6.1
percent year-on-year in July, said Societe Generale in a research
note.
Following a recent sharp increase in food prices in sequential
terms, they are expected to have eased in August, mostly vegetable and fruit
prices as fresh arrivals after certain bumper crops probably assisted in keeping
prices in check.
Prices of tomato dropped significantly, whereas that of
potato and onion continued to be the same. Moreover, prices of pulse are
dropping as increasing imports have begun making a dent in domestic prices,
noted Societe Generale.
The persistent rise in protein prices,
particularly meat, eggs and fish is a challenge. The payment of salary arrears
for government employees in the August and the possible effect of a crop loss
due to extensive flooding in some areas are expected to be the next trigger for
inflation, according to Societe Generale.
