India’s CPI inflation likely to have eased in August

India’s consumer price inflation is expected to have eased significantly in August following a sharp rise in the previous month. CPI inflation is likely to have slowed to 5 percent year-on-year after reaching a 23-month high of 6.1 percent year-on-year in July, said Societe Generale in a research note.

Following a recent sharp increase in food prices in sequential terms, they are expected to have eased in August, mostly vegetable and fruit prices as fresh arrivals after certain bumper crops probably assisted in keeping prices in check.

Prices of tomato dropped significantly, whereas that of potato and onion continued to be the same. Moreover, prices of pulse are dropping as increasing imports have begun making a dent in domestic prices, noted Societe Generale.

The persistent rise in protein prices, particularly meat, eggs and fish is a challenge. The payment of salary arrears for government employees in the August and the possible effect of a crop loss due to extensive flooding in some areas are expected to be the next trigger for inflation, according to Societe Generale.