Yes, retail price inflation in India has been high in recent months. In June 2023, it was 4.81%, which is higher than the Reserve Bank of India’s (RBI) upper tolerance limit of 6%. There are a number of factors that have contributed to this, including:
The rise in global commodity prices,
which has pushed up the cost of food, fuel, and other essential goods.
The disruption to supply chains caused by the COVID-19 pandemic, which has made it more difficult to get goods to market.
The government’s decision to increase excise duty on petrol and diesel, which has added to the cost of fuel.
The high level of inflation is a concern for the RBI, as it could erode household incomes and dampen economic growth. The RBI has taken a number of steps to try to contain inflation, including raising interest rates and selling government bonds. However, it is not clear whether these measures will be enough to bring inflation down to the RBI’s target.
The high level of inflation is also a concern for businesses, as it makes it more difficult to plan for the future. Businesses are facing higher costs, which could lead to them raising prices or cutting jobs. This could have a negative impact on the economy as a whole.
The high level of inflation is a complex issue with no easy solutions. The RBI and the government will need to work together to find ways to bring inflation down to a more sustainable level.
Is inflation forecast to slow in India?
Yes, inflation is forecast to slow in India in the coming months. The RBI has projected a moderate CPI inflation rate of 5.2% for the fiscal year 2023-24. This is lower than the inflation rate of 6.7% that was reported in fiscal year 2022-23.
There are a number of factors that are expected to contribute to the slowdown in inflation. These include:
The decline in global commodity prices, which has started to ease the pressure on the cost of food and fuel.
The improvement in supply chains, which should make it easier to get goods to market.
The government’s decision to cut excise duty on petrol and diesel, which will help to reduce the cost of fuel.
However, it is important to note that there are some risks to this outlook. These include:
The possibility of a global economic slowdown, which could lead to lower demand for Indian goods and services.
The outbreak of a new COVID-19 variant, which could disrupt supply chains and lead to higher prices.
Overall, the outlook for inflation in India is positive. However, there are some risks that could lead to higher prices in the future. The RBI and the government will need to monitor these risks closely and take action if necessary.