Slight easing in inflation no reason to cheer

November and December are months when prices come down considerably. We have not seen that happen this year. That again is a cause for worry, says Mythili Bhusnurmath, Consulting Editor, ET Now.

How are you reading the retail inflation numbers even though the numbers have eased. It is definitely still above RBI’s own comfort level of 6%?
Well yes and it has been above 6% the band of 2% to 6% that the RBI’s own inflation target specifies it has been over that level for 12 months barring the month of March. I would think that the slight easing that we are seeing now is not really a reason for us to cheer particularly because supply disruptions never really ease completely because we now have the farmers’ agitation and one does not really know what that really means for supply disruptions.

November and December are months when prices come down considerably. We have not seen that happen this year. That again is a cause for worry. Add to that the fact that liquidity is hugely surplus. At some point of time, as the economy recovers, we will see demand pressures adding to the supply disruptions and in that case, it will be very difficult to get inflation back under control.

We will see the base effect because inflation kept rising throughout 2020 and as a result, you will find some downward movement in the consumer price inflation but as of now, it is much too high for comfort as far as the ordinary Indian is concerned -- particularly the poor and the lower middle class.