Saturday, August 13, 2022

Why say such things?

"India's Consumer price-based (CPI) inflation eased to 6.71 percent in July on an annual basis, from 7.01 percent in June, owing to easing food and oil prices." ET. "The central bank now sees inflation for Q2 (July to September) at 7.1 percent; Q3 at 6.4 percent; and Q4 at 5.8 percent." "India's wholesale price-based (WPI) inflation eased to 15.18% in June on a year-on-year basis from 15.88% in May, the Ministry of Commerce and Industry said." ET. "The number has remained in double digits for the 15th consecutive month." If input prices are rising at such rates, at some point they will have to be passed on to consumer prices. WPI for July has not been released as yet. The government expects CPI inflation to fall below 6% soon due to a favorable monsoon bringing food prices down. BT. "The peak inflation seems to be behind us as near-term upside risks to prices have been on a decline." FE. "The low base effect of food and fuel will keep the inflation number elevated from next month." "But the good news is inflation is most likely not going to worsen from the current levels." "A softening in food prices is expected to bring down India's headline inflation but sticky core inflation remains a worry, a report by HSBC said." ET. "The report stated that more upfront rate hikes by RBI may not be enough to bring down core inflation." But, how can they be so sure? "Around much of the Northern Hemisphere, from Hungary to Hawaii, from the drying Rhine River to the now-recovering Rio Grande, or from Casablanca to California, summer droughts and high temperatures are having a serious impact on everything from agriculture to the freight industry." DW. "The source of the River Thames has dried up further downstream than ever before, as England looks set to enter a drought that some experts say the country is unprepared for." Reuters. If these rich countries end up importing food from international markets prices will surely rise later in the year. "India will become the second largest economy by 2031 if it strikes a growth rate of 11%, as per the Reserve Bank of India (RBI) deputy governor Dr Michael Debabrata Patra." LM. "Patra believes if India can capitalise on its opportunities and overcomes the challenges, then the country 'will bend time'." Earlier, Chief Economic Advisor (CEA) to the government V Anantha Nageswaran said, "It is possible for the size of the Indian economy to be $20 trillion by 2040", which is only 18 years away, "with per capita income of $15,000." And, pigs might fly. "Real GDP is estimated to have grown 8.7% in FY22 (2021-22)", while "Nominal GDP saw a growth of 19.5% in FY 22." That is only because the economy had shrunk the previous year. So, for real GDP to grow at 11%, nominal GDP has to grow by 20-25%. And if the economy grows by such a scorching rate, won't that send prices soaring? Do these highly educated gentlemen think such growth is possible? Why do they say such things? 

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