RETAIL INFLATION

level of the central bank’s target.

As the RBI failed to ensure inflation remains at 4% with a margin of 2% on either side for three consecutive quarters, it has sent a report to the government detailing the reasons for the failure and steps it is taking to bring CPI in the target range.

“The base effect-driven easing of headline inflation does not herald the beginning of easing inflationary cycle. We believe it will be the base effect that will push inflation once again to beyond 7% starting from December once the favourable effect turns decisively adverse and the headline inflation likely potentially testing the April high during February (if not earlier),” said Kunal Kundu, India economist, Societe Generale, Bengaluru. “Stubbornly high core inflation (the highest reading in eight years and rising), despite the lower headline print is indicative of the fact that price pressure is not going to go away in a hurry.”