The Consumer Price Index (CPI) based inflation in India rose from 4.23 percent in April to a six-month high of 6.3 percent in May. Despite the high inflation figure, Mark Matthews of Bank Julius Baer & Co believes that consumer price index (CPI) inflation in India will not be at 6 percent for a very long period.

Share Market Live

NSE

During an interview with CNBC-TV18, he said, “I cannot believe that CPI inflation in India will be at 6 percent forever. These distortions are something we should not view as exact, but when I look forward, I see in India a similar thing that I see in America and in the rest of the world, where people will be rushing out and doing things, and that would put pressure on certain prices.”

The US consumer price index recently posted its biggest year-on-year gain since August 2008 of 5 percent, following a 4.2 percent rise in April. Experts believe that the rise in the US consumer price index reflected short-term adjustments related to the reopening of the economy.

Speaking about the US inflation figures, he said, “We agree with the Federal Reserve that inflation is transitory there. We agree with the Reserve Bank of India (RBI) that inflation is transitory in India too. I know the wholesale price index was at, if I am correct, an all-time high but like in the United States, I do not think it will continue because there is a big base effect, and a lot of the prices that have gone up should moderate over the next few months.”

He further said that the US Federal Reserve will not be very hawkish in its policy.

According to him, it's best to keep a balanced portfolio right now. “Our portfolios are balanced right now. In other words, we have equal weightings in quality, growth and value. The reason is that although we are in inflation- it is a transitory camp; nobody knows for sure, and therefore it’s best to be balanced,” said Matthews.

“It’s a bull market, it’s a rotational kind of a market. So having a bit of each is a strategy that’s working right now,” he said.

(With inputs from Reuters and PTI)

For the entire interview, watch the video.

(Edited by : Dipika Ghosh)