InvestorQ : What do you read from the inflation number and do you see that as a negative for the markets during the day?
diksha shah made post

What do you read from the inflation number and do you see that as a negative for the markets during the day?

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ishika Banerjee answered.
6 months ago
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Actually, inflation is a concern because it came in for May-21 at 100 bps above consensus estimates and nearly 201 bps higher than the Apr-21 inflation rate of 4.29%. The aggressive spurt in inflation came from food, fuel and also from core inflation, which is the major worry for the markets.. Even WPI inflation or wholesale inflation for May 2021 came in sharply higher at 12.94%, due to a late burst in fuel and edible oils.

Fuel was the culprit. Fuel inflation alone stood at 11.58% due to the daily spikes in petrol and diesel prices. Food inflation bounced from 1.96% to 5.1% in May-21 and there was a sharp spurt in rural inflation in the month of May. Of course, weak base effect also played a role. The biggest worry for the RBI and the government would be that core inflation excluding food and fuel, is also up to an 83-month high level of 6.60%.

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