TOPIC – Transient easingThe latest retail inflation data suggest, at first flush, that price pressures have begun to moderate in the economy, with the August print for CPI showing inflation having slowed for a second straight month to a 5.3% pace, after July’s 5.59%. Price trends among the constituents of the Consumer Price Index and the latest Wholesale Price Index based inflation, however, show that it would be premature to drop the guard on price gains. For one, the year earlier inflation reading was elevated thus
imparting a favorable base effect. Month on month, however, the CPI
nudged up 0.25% from July, belying the
inference of softening inflation. And the pace of price gains in at least three essential food components speeded up from the preceding month, with meat and fish, dairy and oils and fats posting significant accelerations. Edible oils have been on a tear for months now — the August print was 33% after July’s 32.5% — and an earlier round of cuts in import duties have had little impact in cooling their prices, forcing the Centre to announce another
tranche of duty reductions this month. Inflation in two other vital protein sources, eggs and pulses, also continued to remain a cause for concern. While inflation in eggs remained in the high teens at 16.3%, price increase in pulses was 8.81% after slowing 23 basis points from July’s 9.04% pace. A
persistent and wider deflation in vegetable prices was the main positive contributor to the easing in overall food and beverages inflation last month. The pace of inflation in fuel and light, clothing and footwear, health as well as household goods and services all
ratcheted up last month. Transport and communication, which includes pump prices of the main automotive fuels of petrol and diesel, stayed stuck in double digits at 10.2% albeit after a 30 basis points easing from July’s 10.5% pace. And the WPI data show higher transportation costs combined with input price pressures fanned faster inflation in manufactured products as well, sending the segment’s pace to 11.4%, a fourth straight month of double-digit price gains. The outlook for inflation is far from
sanguine if one considers that IHS Market’s PMI survey for services
revealed input costs rose in August at the fastest rate in four months, and a recent CII poll of CEOs showed a majority 67% expect average retail inflation this year to hover close to or exceed the RBI’s mandated monetary policy upper threshold of 6%. Policymakers are only too well aware that ultimately, inflation is not just about a point reading but far more about consumers’ and businesses’ expectations of the trend in prices. Fears of future high inflation dampen sentiment and thus
retard economic activity. Cutting fuel taxes is a sure shot way to address a major component of price pressures and it is time the Government bites the bullet and acts to provide a more
abiding solution.
MEANINGS AND WORDS
Nudged (verb) – Gently encourage (someone) to do something
Synonyms – Poke, shove, punch, prod, dig
Antonyms – Discourage, pull, dissuade, repress, enfeeble
Inference (noun) – A conclusion reached on the basis of evidence and reasoning
Synonyms – Hypothesizing, conjecture, speculation, reckoning, surmise
Antonyms – Elucidate, describe, proclaim, delineate, announce
Tranche (noun) – A portion of something, especially money
Synonyms – Chunk, articulation, smidgen, modicum, scintilla
Antonyms – Unprofitableness, misfortune, bad luck, misconception
Persistent (adjective) – Continuing to exist or occur over a prolonged period
Synonyms – Tenacious, resolute, indefatigable, diligent, interminable
Antonyms –Irresolute, perfidious, traitorous, faltering, fickle
Ratcheted (verb) – Cause something to rise or fall as a step in a steady and irreversible process
Synonyms – Compress, condense, constrict, contract, recede
Antonyms – Accumulate, escalate, burgeon, swell, intensify
Sanguine (adjective) – Optimistic or positive, especially in an apparently bad or difficult situation
Synonyms –Bullish, assured, optimistic, buoyant, cheery
Antonyms –Pessimistic, gloomy, affable, amicable, unassertive
Revealed (verb) – Make (previously unknown or secret information) known to others
Synonyms –Divulge, disclose, babble, disseminate, betray
Antonyms –Dissent, repudiate, dispute, contradict, conceal
Retard (verb) – Delay or hold back in terms of progress or development
Synonyms –Obstruct, restrain, decelerate, hamper, encumber
Antonyms –Accelerate, expedite, hasten, quicken, spur
Abiding (adjective) – (Of a feeling or memory) lasting a long time
Synonyms –Dawdle, reside, countenance, endure, swallow
Antonyms –Abscond, decamp, evacuate, scram, dodge