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New Delhi: The Goods and Services Tax (GST) has failed to bring inflation down. TheModi government had claimed that inflation rate will be brought under control soon after implementation of GST but the report coming from various agencies have other to say.  Retail and wholesale inflation accelerated in July and the uptrend is likely to continue in the coming months, says a Morgan Stanley report.

Both CPI and WPI inflation have troughed in June and are expected to rise further in the coming months. The wholesale inflation rose sharply to 1.88 per cent in July from 0.90 per cent in June 2017, mainly on account of turnaround in prices of food articles, especially vegetables.

Retail inflation jumped to 2.36 per cent in the month, chiefly driven by hardening of prices of sugar and confectionery items, pan, tobacco and intoxicants.

Post RBI's rate cut by 25 bps earlier this month, the debate on further easing continues on expectation that inflationary pressures would remain subdued, providing the central bank with further room to ease.

However, Morgan Stanley maintains that RBI is unlikely to take up any further cuts as inflation is expected to gradually edge back towards the target of 4 per cent. For easing of monetary policy, the report said, there is a need to see further deceleration in underlying inflation pressures.

 

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