Core Inflation at 7%

In India core inflation is defined as all non food categories of manufactured goods and resources. As one of the JP Morgan or FII commentators mentioned on the Friday shows on Bloomberg UTV, Subir Gokarna and Duvvoori Rao as a team could very well be wrong to target that category when it is entirely made of imported inflation and as such is an almost 100% bearing on downstream manufacturing inflation. However The RBI team already seems to have gotten itself a big reprieve with Crude immediately heading lower and likely more commodities following it in which case by a cosmic karma axis (that has also probably kept good guys like me unemployed) we would be at the target of 4-5% core inflation in a jiffy. Coming back to the classification, after admitting most of India’s inflation is supply side ( and from the looks of ti , mostly imported) it seems to be unfortunate on RBI’s part to target that with meaningless interest rate hikes which would just bulldoze any remaining disposable spend in the economy, without bringing down any prices. As itlooks now, we are just simply sliding into nothingness till some prices materially get lower, with The retauil lifestyle and the infrastructure champions both smothered by higher prices and usury to be sponsored by RBI hikes..RBI hikes will continue at least for another 200-300 basis points and we will still end up with a growth of 7% plus. That is an undeniable truth and your low volatility worst case scenario

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