Rising food cost may push August retail inflation to 5-month high: Reuters poll

 But rising price to complicate RBI's policy path as economic growth cooled to a three-year low in Q2

 

India's retail inflation is expected to have picked up to a five-month high in August, largely driven by higher food costs, a Reuters poll showed, easing pressure on the Reserve Bank of India (RBI) to cut interest rates again after poor growth data.

Consumer prices were forecast up at 3.20 per cent in August from a year ago, jumping from July's 2.36 per cent, according to the poll taken September 5-8 of nearly 40 economists.

Forecasts for the data, scheduled to be released on September 12 at 1200 GMT, ranged from 2.50 per cent to 3.55 per cent.(economy news)

If the consensus is met, it would be the highest since April, but below the RBI's medium-term target of 4.0 per cent for the tenth consecutive month.

Tushar Arora, economist at HDFC Bank, said food prices continue to rise in August, mainly driven up by "unfavorable weather conditions and supply chain constraints."

Food and beverage inflation, which accounts for nearly 50 per cent of the consumer price index basket was expected to have rebounded in August after prices fell in the three previous months .

Monsoon rains this year have caused damages to crops of some perishable food items and hindered movement of goods.

The resulting hit from a shortage of production and supply of vegetables such as tomatoes and onions - which are basic ingredients in Indian kitchens - suggests inflation will be elevated in coming months....READ MORE

Demonetisation: RBI will give junked notes' figure after counting, says FM

Arun Jaitley says final figures will come out once the fake notes were weeded out

Finance Minister Arun Jaitley Tuesday said the RBI is in the process of counting scrapped currency notes and will come out with the final figures once the fake notes were weeded out.
Answering oft-repeated questions over the issue, he said in the Lok Sabha that the Reserve Bank had received the last tranche of scrapped currency notes of Rs 500 and Rs 1,000 only in July and the central bank would take time in counting the billions of notes.

Economy News policy

On November 8 last year, the government had scrapped high denomination currency notes of Rs 500 and Rs 1,000 which amounted to around 86 per cent of the currency in circulation.
Replying to a discussion on supplementary demands for grants in the Lok Sabha, Jaitley said one of the major benefits of demonetisation was squeezing of funds for terrorists in Jammu and Kashmir and naxalites in Chhattisgarh.

On questions regarding the amount of scrapped currency deposited back in the banks, the finance minister said, "Today they (RBI) have to count every currency note. They have to take the fake currency out...That exercise the RBI is taken to a very advanced level."

The minister said since March demands were being raised for disclosure of the amount of scrapped currency deposited in the banks but it can not be done over night.

"...I am hearing that argument 'tell us the currency'. Please study the subject closely. And therefore as soon as they (RBI) complete this exercise, the figure will be placed by them before the country along with the figure of fake currency," he added.....(READ MORE)