RBI monetary policy: Room squeezed out, says IDFC First Bank economist

While tax increases led to an increase in the prices of petroleum products, this could lead to broad-based cost push pressures through the transportation channel

The Reserve Bank of India (RBI) is faced up with a challenging situation of a surge in inflation coming alongside a sharp contraction in growth conditions. After the August meeting, we have seen two more retail inflation prints and both have been adverse – July number at 6.73 per cent and August at 6.69 per cent. We expect no comfort to the headline CPI numbers for September, given the repeat spurt in vegetable prices. Core inflation has also remained sticky. Post the MPC meeting in August, we came to know that the GDP numbers for the first quarter was at