BENGALURU: The likely build-up and development of a scenario of delayed monsoon and escalating prices might lead to a longer hiatus than expected in rate cuts by the Reserve Bank of India (RBI). As reported by Dun & Bradstreet, D&B Economy Observer said that it is not only the rate cut but the transmission of the same that will be the main focus in the near future as indicated by the RBI.

The spike in Consumer Price Index (CPI) inflation strengthened concerns regarding inflationary pressures. Everyone is now waiting with bated breath for the monsoons, as it could have potential inflationary or disinflationary pressures. The arrival of monsoon has been delayed for three years in a row now. There has been a 25% deficit in rainfall during the first two weeks of June 2016, with the sowing of kharif crops likely bear the brunt of this delay. The greatest impact of this is going to be on inflationary expectations.

The CPI inflation reached a 21-month high in May 2016 and Wholesale Price Index (WPI) inflation has been positive for two months after a 17- month period of decline. There are certain other risks to inflation which arises from rising international commodity prices-particularly crude oil, implementation of the 7th Pay Commission and the increase in minimum support prices of certain commodities for the kharif season.

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