A diversified portfolio could be best bet against steep inflation: Experts

Inflation has breached the upper limit of the Reserve Bank of India's tolerance band at a time when the economy is growing below its potential

Consumer Price Index (CPI)-based inflation rose to a six-month high of 6.3 per cent in May. With returns on many fixed-income products turning negative – the interest rate on State Bank of India fixed deposits for the 5- and 10-year tenures is 5.40 per cent – investors are a worried lot.

Potential risks 

Many experts believe the current phase of inflation may not be transient. “Among food products, prices of protein items may stay up. Brent crude is at around $74 per barrel but could move up to $78-80. High fuel prices would raise transportation costs, which would in turn