Softening of global commodity prices might not help much
Wholesale Price Index (WPI)-based inflation might breach the six per cent-mark in the coming months, against 5.79 per cent in July, owing to the rupee’s fall.
In the three months till June, WPI-based inflation stood within the Reserve Bank of India’s (RBI’s) comfort zone of four-five per cent. In its monetary policy review last month, RBI had said it would try to restrict inflation to five per cent by the end of this financial year.
“The impact on inflation would be seen in a period of time, not in the immediate month. It depends on what level exchange rates settle at,” said Madan Sabnavis, chief economist, CARE Ratings. He added there would be a 0.5-1 per cent impact of imported inflation in the coming months, which could lead to WPI-based inflation exceeding six per cent.
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Diesel prices, reduced by Rs 3.37 per litre on Sunday, would henceforth be exposed to the volatility in global crude oil prices