InvestorQ : Do you think that the low CPI inflation this week is good for the Indian economy?
Rutuja Nigam made post

Do you think that the low CPI inflation this week is good for the Indian economy?

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2 months ago
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For the month of September 2021, retail inflation came in 95 bps lower compared to the previous month at 4.35%. Effectively, inflation has fallen nearly 200 bps from the peak. However, there is a word of caution. While it is true that food inflation has fallen, there is still a lot of base effect in this low inflation. The real issue is core inflation, which is elevated at 5.8% levels. With Brent at $85/bbl the downstream effects cannot be underestimated.

The second big concern is the US inflation, which shows that supply chain bottlenecks are here to stay. US September inflation was at 5.4%, the highest in 13 years and hard is that comforting. The US Fed is veering to the view that demand supply gap will stay for much longer than anticipated. The message for India from the US inflation is that high levels of inflation are not going away in a hurry and that applies to India too. So data is Ok at best.

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