InvestorQ : What is your take on food inflation and core inflation in July 2022?
Mahima Roy made post

What is your take on food inflation and core inflation in July 2022?

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2 months ago
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For July 2022, food inflation tapered sharply by 100 bps from 7.75% to 6.75% as most of the food items including vegetables and pulses trended lower, although cereals tended higher on weak output fears. At the same time, core inflation once again crossed the 6% mark in July 2022 after falling to 5.96% in June 2022. However, core inflation at 6.01% is still much lower than 6.97% core inflation recorded in April 2022. This is net of food and fuel inflation.

Core inflation is structural in nature and, hence, tougher to manage and regulate. Core inflation around 4% should be the ideal scenario, but that looks some time away. Normally, controlling core inflation creates a trade-off between government revenues and inflation control. Today inflation control is having a fiscal cost and that is boosting core inflation.

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