new Delhi. Retail fuel prices have not been marked in the market for a few months and should be increased by about 15 per cent to reflect current international crude oil prices. Morgan Stanley has given this information in a report.
Thus, assuming an average of US$110/bbl in FY2023 (based on March 7 oil futures), the headline CPI for India is likely to average 6 per cent in FY2023.
He said, “We believe that the CPI will remain above the 6 per cent mark by September 2022, and reduce to only 5.6 per cent by the fourth quarter of 2022. With regard to the policy response, we expect the RBI to reverse the April policy. Will initiate monetary policy normalization with repo rate hike. Review and follow up with repo rate hike of 25 bp in June policy review.”
Risks arise from a sharp and sustained increase in oil prices, which will potentially lead to an increase in the front-loading rate.
Food inflation has reached the highest level since December 2020. On a year-on-year basis, the food CPI rose to 5.9 per cent in February from 5.4 per cent in January. The rise in the food CPI has been led by higher prices of food items such as meat, fish and eggs, followed by vegetables, cereals and its products. High-frequency food price data for March (month-to-date) indicates that prices for oil and fats as well as milk have risen, while vegetable prices are declining at a slower pace.
Morgan Stanley said the headline CPI rose to an eight-month high to break the upper bound of the target band. In line with our expectations, the headline CPI rose 6.1 per cent in February to 6.1 per cent in January from 6 per cent.
In a note, Anand Rathi Group said, “Retail inflation in February 2022 crossed 6 per cent for the first time since June 2021. The rise in global crude oil prices and the ongoing war in Europe and economic sanctions has resulted in supply-chain disruptions.” With continued uncertainties including disruption, the outlook for inflation remains uncertain. The government may, for now, limit the pass-through of higher oil prices. Nevertheless, if the situation persists or continues to rise, It could be challenging. We expect the RBI to follow global cues but moderately and start raising policy rates. (-AnyTV News)
read this also – Click to read the news of your state / city before the newspaper