....Retail inflation is a superior indicator of the underlying demand situation in the economy, which determines the extent to which retailers can pass on a sustained rise in wholesale prices. While, in a strong demand environment, retailers can pass on the entire increase in wholesale prices or even more to their end-consumers, if demand remains weak, retailers could witness pressure on margins. While there is little doubt that RBI will soon begin to consider CPI as a primary measure of inflation, it might have to make some adjustments to the overall CPI. The monetary policy has limited efficacy to deal with the direct impact of food and fuel inflation. Currently, .........
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