The inflation trajectory going ahead would be shaped by both global and domestic factors. While vegetable prices are likely to see seasonal winter correction, prices of cereals and spices may stay elevated.

High feed costs could also keep milk prices up. Adverse climate events are increasingly becoming a significant source of upside risk to food prices. Geopolitical tensions continue to cloud food and energy prices outlook. The correction in industrial input prices and supply chain pressures, if sustained, could help ease pressures on output prices; but the pending pass-through of input costs could keep core inflation firm.

CK Ramanathan

Ghaziabad

Demonetisation records

This refers to the report ‘SC tells Centre, RBI to submit records on demonetisation’ (December 8). The apex court’s gesture to see the records and satisfy itself about the procedure followed in the announcement of withdrawal of the legal tender character of high denomination currency notes on November 8, 2016 and the follow up action by GoI and RBI is praiseworthy.

That the issue was dragged to court instead of using the houses of Parliament for sorting out issues at the appropriate time does not bring much credit to the former FM or his party.

Having said that the court’s observation that “the way government takes a decision can always be examined” (in courts) is understandable. We are lucky to have all the pillars of the Constitutional System vibrant and functional after several decades.

MG Warrier

Mumbai

Apt cartoon

The pictorial representation covering the complacent conviction expressed by an innocent child on the present ticklish variance between small and big savings scenario, in “Pocket” (December 7), though hilarious, is apt and invoke serious thought on how present market dynamics are impacting inflicting consumer behaviour.

It is an indisputable fact how consumers are motivated to purchase more commodities at malls than required under the guise of super-savings, leading to wastage and also making a dent on their savings. Kudos for bringing in such a timely and thoughtful cartoon.

Sitaram Popuri

Bengaluru

Rate-inflation dynamics

With reference to the Editorial ‘Time to taper’ (December 8). The 2.25 per cent increase in the repo rate since March 2018 and its transmission into the economy has not made any marked impact on the price level of essential commodities. Repo rate hikes alone are not enough to bring down the prices of essential goods. Governments have to ensure smooth and sustained supply of essential goods to every part of the country. The scarcity of essential foodgrains is persisting and resulted in their increased prices.

The hike in repo rates is getting transmitted after a lag due to the repo-linked lending rates of banks. It has pushed up the cost of borrowing and will again increase the cost of investment. The repayment burden on retail borrowers will be more and will affect consumption and savings. The repo rate hike is making a negative impact.

The government must enhance the production and supply of foodgrains and edible oil, besides cutting the taxes imposed on energy. Reduction of input costs is paramount rather than hiking borrowing costs.

VSK Pillai

Changanacherry

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