X
Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.
This is an entirely free service. No payments are to be made.Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.
This is an entirely free service. No payments are to be made.
| Login Failure | ||||||||
|
||||||||
| Sign Up | Forgot Password? | ||||||||
The data pertaining to inflation for the month of April suggests that the retail inflation is on the rise. Retail inflation for April came in at 5.39%. Now, this is way higher compared to 4.83% in the preceding month.
The rising retail inflation is mainly on account of increasing fuel and food prices. Talking about fuel, the price of the Indian basket for crude oil has gone up by more than 71% between February and mid-May. Previously, low oil prices helped to keep the inflation levels in check. However, a surge in the oil prices would have an adverse effect on inflation levels.
Rising oil prices in turn lead to increase in the prices of the food items because of the logistics cost involved. Further, drought has played its part too. Reservoir levels are down in many parts of the country. This has affected the sowing of crops, leading to lower production and higher prices of food items.
While the government cannot control oil prices, it can partially keep a check on food inflation. The government's discipline on minimum support prices coupled with maintaining proper demand supply balance in terms of food products ensures that the prices do not inflate.
While, the government has done a good job in balancing the demand supply balance for cereals, the same does not hold true for pulses. It could have done a better job in controlling the prices of pulses. Going forward, the government needs to fix these structural impediments to ensure low and stable inflation in the medium term.
Further, a normal rainfall as predicted by the Indian Meteorological Department (IMD) will help keep the inflation numbers in check. However, if the rain gods disappoint, there may even be a case wherein the RBI increases interest rates should inflation begin creeping upwards.
While, RBI wants to bring down the inflation number at around 4% by the first quarter of fiscal year 2018, a rise in the oil and food prices can act as a deterrent in achieving this target.
For information on how to pick stocks that have the potential to deliver big returns, download our special report now!
Read the latest Market Commentary
|
| |
Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.
Copyright © Equitymaster Agora Research Private Limited.
Whitelist | Refer | Terms | Privacy | Contact | Advertise | About | Sitemap
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster requests your view! Post a comment on "Rising Inflation Is a Concern". Click here!
Comments are moderated by Equitymaster, in accordance with the Terms of Use, and may not appear
on this article until they have been reviewed and deemed appropriate for posting.
In the meantime, you may want to share this article with your friends!