Battle against information to continue, say experts.
After remaining above the Reserve Bank of India's(RBI) comfort level of 6% for most part of this year,retail inflation is slowly easing,and efforts are likely to continue to further reduce it in the coming months amid global uncertainties.
High prices of crude and edible oil,pulses and vegetables were among the main factors behind the high inflation during the year.This trend came against the backdrop of the Russia Ukraine conflict that started in February and disrupted the global supply chain and purchased higher prices of many commodities.
Since May,the RBI has hiked the short-term lending rate(repo) by 2.25 percentage points,taking it to a nearly three-year high of 6.25%.
The consumer price Index(CPI) based retail inflation crossed the RBI's comfort level of 6% in January itself and thereafter it remained elevated for nine months before slipping to 5.9% in October.
An RBI paper on Anatomy of Inflation,s Ascent in India's Aid ,The initial inflationary pressure was delivered by successive supply shocks but as their impact wanted,a revenge rebound in spending and especially a swing from goods to contact-intensive services is generalizing price pressures and making them persistent.
Recently RBI governor Shaktikanta Das said uncertainties surrounding the inflation trajectory are sizable, given the geopolitical tensions,global financial market volatile,pending pass through of input costs to domestic output prices and weather related disruptions.
Core inflation (CPI excluding food and fuel) is exhibiting persistence around 6% for the past few months. Hence,there is no room for complacency and the battle against inflation is not over.This necessitates a constant vigil on prices,he said earlier this month.
During the year,inflation was a major challenge for regulators across the world, including in the US,the UK and Europe, mainly as commodity prices spiked due to supply chain disruptions caused by the Russia-Ukraine conflict.
The conflict came at a time when the global economy was slowly recovering after being severely hit by the coronavirus pandemic.
For the first time since the introduction of the monetary policy committee (MPC) in 2016,the RBI submitted a report to the government explaining why it failed to keep inflation within the targeted upper tolerance band of 6% for three consecutive quarters since January.
On the wholesale front,things were no better with inflation remaining in double digits till September before nose diving to 5.85% in November. RBI has projected headline inflation averaging at 6.7% in the current fiscal.In the December quarter,it expects retail inflation to be at 6.6% and decline to 5.9% in the March quarter.
According to rating firm ,inflation is likely to ease over the next 12 months on a brisk winter crop sowing,good water levels in the reservoirs alongside the moderation in commodity prices.We project the year on year inflation for December 2022 at 5.9-6.1%,which would Result in an average CPI inflation for Q3 FY2023 of nearly 6.2%,well below the estimate pegged by MPC for the quarter(+6.6%).
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