RBI Is Expected To Maintain A Status Quo On Policy Rate Stance

WHEN HUMOURIST MILES Kington said, "Knowledge is - knowing a tomato is a fruit; wisdom is - not putting it in a fruit salad," he might not have been referring to the current prices of tomatoes which eclipsed the cost of most exotic fruits, but raising the threat of a hawkish monetary stance/dowsing the potential for an interest rate cut.

- PARITOSH KASHYAP

Since the tomatoes set our hard palate and home budget on fire, the average weekly prices of cereals, oil and other vegetables have also shot up though some pulses moderated, giving relief to the common man. Among these, cereals especially rice and wheat seem to be in shortage which could further fuel the inflation. With food items accounting for almost 40% of weight in the Consumer Price Index, the current situation may keep the inflationary situation on the boil.

The near-term outlook looks not reassuring as the weather-led disruptions are expected to prolong the supply issues. By and large, the July inflation is likely to trend higher, north of 5.5% as prices of vegetables and cereals show no signs of abating.