The implementation of the Goods and Services Tax in 2017 coupled with rising commodities prices will put pressure on the retail inflation in FY18, said Chief Economist at Crisil, DK Joshi.
On an average, the CPI inflation will be at 4.5 percent in 2017, said Indranil Pan, Chief Economist at IDFC Bank. He sees CPI inflation cross 4 percent in March.
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India’s retail inflation rate grew 3.65 percent in February, marginally from January’s 3.17 percent, mirroring flat demand as households and companies, hit by demonetisation — induced cash crunch barely raised spending on a raft of goods and services like eating out, recreation and amusement and clothing and footwear.
Pan said there is no clear trajectory for a rate cut by the Reserve Bank of India after seeing the movement seen in inflation. He added that an increase in the repo rate is more likely than a rate cut.
Money Control, 14 March 2017