India Consumer Price Inflation Likely Rose Due to Vegetable Price Surge: Multibagger Poll
By Vivek Mishra
BENGALURU (Multibagger) - According to a recent Multibagger poll of economists, India's consumer price inflation is expected to have increased in June after five consecutive months of decline. This rise is attributed to a significant jump in vegetable prices caused by extreme weather conditions that damaged crops.
Key staples like tomatoes, onions, and potatoes saw double-digit price surges last month due to the impact of extreme heat and heavy floods in India's northern states on agricultural production. Food prices make up about half of the overall consumer price index (CPI) basket.
The poll conducted from July 5-9 by Multibagger with 54 economists projected a 4.80% increase in consumer price inflation from a year earlier, up from 4.75% in May. Forecasts for the upcoming data release on July 12 ranged from 4.10% to 5.19%.
Chief economic advisor Kanika Pasricha noted, "A sharp spike in vegetable prices, along with cereals and pulses, kept food inflation at higher levels, offsetting the softness in eggs, fruits, and spices prices. Core inflation, excluding volatile items like food and energy, is expected to remain flat at 3.10%, reflecting weak domestic demand despite the economy's growth."
Some economists anticipate inflation to remain above the Reserve Bank of India's 4% target this fiscal year and next, leading to a potential rate cut later this year. The U.S. Federal Reserve is also expected to start easing in September.
Overall, the surge in vegetable prices in India is likely to impact consumers by increasing the cost of living and potentially influencing future monetary policy decisions by central banks.