BE/RBI NOTE/43/2018
The inflation in prices is likely to remain sober during the second half-year of 2019. Risk related to if increased inflation was attributed to the following:
- Hike in minimum Support Price on various goods
- Seventh Central pay commission
- States’ HRA implementation
- Imported inflation due to rupee depreciation
- This is expected to be offset by Low food inflation during the second half of 2019.
- However, the Core inflation is expected to be at a higher scale
- Thus the chances of a hike in the interest rates during the FY 2019 are bleak which is mainly attributed to the expected benevolent curve in the inflation rate.
Statistical Information:
| SN | Statistics | As on Sep 2018 – % | As on Aug 2018 – % | Remarks |
| 1 | Core inflation including petrol & diesel | 5.9 | 6.1 | |
| 2 | A decline in Housing Inflation | 7.1 | 7.6 | |
| 3 | Monthly momentum in core CPI | 0.5 | 0.6 | |
| 4 | Transport and communication inflation | 6.4 | 6.0 | Increased oil prices |
| 5 | Core CPI Inflation: expected average | 4.5 | … | Expected 5.8 in 2HFY ‘19 |
| 6 | Moderation in IIP Growth | … | 4.3 | |
| 7 | Moderation in the manufacturing sector | 4.6 | …. | |
| 8 | Expansion in Infra & Const. segment | 7.6 | 6.7 (Jul18) | |
| 9 | IIP Growth to moderate around 4.1% in H1FY 19 as against 5.1% in H1FY 19 | |||
- Experts feel that after taking into account the recently concluded MPC (Monetary Policy Committee) meeting and the subsequent reports of RBI, it is observed that more focus is given to the inflation part on one side, elevated crude oil prices, volatility in global financial markets, hardening of input prices amidst rupee weakness, adverse effects of fiscal slippage and staggered effect of HRA increase by states and its second round impact on the other.
- Structurally falling inflation, and softening growth should be helpful in capping the upside pressure and thus pave way for RBI’s keeping the interest rates unchanged in the near future.
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