Ongoing virus-related supply disruptions as well as one-off factors such as phone tariff hikes have kept inflation higher than we had anticipated over recent months. But with food inflation set to drop sharply and demand set to remain depressed, we are still comfortable with our view that inflation will ease towards the RBI’s 4.0% target over the coming months. That should assuage the concerns of the MPC and enable it to resume easing policy.
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