In an interview to CNBC-TV18, Rupa Rege Nitsure, Chief Economist at L&T Financial Services spoke about the January wholesale price index (WPI) inflation.
In an interview to CNBC-TV18, Rupa Rege Nitsure, Chief Economist at L&T Financial Services spoke about the January wholesale price index (WPI) inflation.
Below is the verbatim transcript of the interview.
Q: We cannot help you with more numbers except the headline, we are still awaiting details. How do you react to this 2.84 percent, does it look like we should not fear a rate hike anytime soon?
A: It is slightly above market expectations but sequentially we had seen some hardening in crude, petroleum, fuel items and other global commodities which are part of the raw materials in the WPI. Also, PMI manufacturing has been showing pressure building up from the input sides. So that is getting reflected. However, the base effect is very favourable for WPI, unlike for consumer price index (CPI) because last year I think in January, there was a significant pass through of global commodity prices into domestic producer prices.
Q: You were just saying therefore directionally it is telling you that inflation is under control and not a big bother at all?
A: So far as WPI is concerned, the base effect is favourable, but so far as CPI is concerned, the base effect is unfavorable until June-July and that is what is a nominal anchor for monetary policy. So, I think we have to accept slightly hardening trend in CPI until May-June.
