The Wholesale Price Index-based (WPI) inflation may soften below the Consumer Price Index-based (CPI) inflation in six to nine months as concerns of global growth, said Upasna Bhardwaj, senior economist at Kotak Mahindra Bank. The March WPI inflation came in at 3.18 percent versus 2.93 percent month-on-month.

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Bhardwaj said that there are global growth concerns, somewhere the upside pressures on commodity prices should be muted and as a result of which we might see WPI inflation lower than CPI inflation 6-9 month down the line.

Talking about food inflation, she said, “For a quite some time we have been talking about the fact that food disinflation is going to stop in the next 1 or 2 months and we will start seeing positive food inflation going forward and that is panning out.”

“Yes, there is a risk but having said that in part if I look at 6-9 month trajectory specifically for monetary policy decision, and there the internals might now be changing, we might be seeing core inflation come lower and food inflation go higher but on a net-net basis the headline will still be closer to 4.2-4.3 percent by end of the year which is not very way off and until October-November we are not looking at above 4 percent reading. So net-net the scope for monetary accommodation still is there but monetary policy committee has to be cautious because of all the risk and we have oil prices also inching higher,” she added.

“All these risks will keep the MPC little cautious. We do see room for one more rate cut but I do not think June is a given. I would rather assign a little higher probability to August than June because maybe in parts some of these risks would materialize or at least we will know which way are they headed to take a better sense on how the August policy could provide the accommodation room, but at this point I do not see any scope for a rate cut in June,” she further added.

First Published:Apr 15, 2019 2:05 PM IST