India: Inflation to ease to 5.6% in July on year – BofA

Dhwani Mehta FXStreet

Analysts at Bank of America Global Research (BofA) raised India’s retail inflation forecast by 30 bps to 5.3% for FY22 while predicting the price pressures to eases this month on an annualized basis.

Key quotes

“However, we believe that the peak inflation is behind us, with food inflation on track to moderate due to a high base and also the government's efforts,”

“Inflation to ease to 5.6% in July on year, despite risks around food inflation and higher global oil prices. Still, RBI is unlikely to be too concerned at this stage and will look through the “transitory hump” as current inflationary pressures are still predominantly supply-driven, house adds. MPC’s next decision due on Aug. 6.”

Market reaction

USD/INR is currently traded flat at 74.60, having faced rejection at higher levels amid the US inflation surge-led dollar’s strength.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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