<b>Letters:</b> Inflation expectations

Drivers factoring in realised inflation are combination of structural, tertiary and cyclical factors

Sajjid Chinoy’s column, “Why inflation undershot expectations” (May 30), succinctly captures four important factors —food items, output level, commodity market and rupee appreciation — behind the “systematic forecast errors” of inflation expectations. 

Predictive ability of forecasting inflation could be erroneous as the gap between the estimated figures and realised rates is getting wider. Volatile macroeconomic factors coupled with “fear of uncertainty” undershot the “adaptive” expectations of price level.

An earlier article in this paper, “Understanding the inflation hawks” (May 18) by Sonal Varma and Neha Saraf, also examines a few drivers pushing up or down Consumer Price Index (CPI) inflation. There is