India's retail inflation remains high, core inflation defies softening input costs: RBI
Mumbai (Maharashtra), March 21: Reserve Bank of India on Tuesday informed that consumer price inflation (or retail inflation) in India remained high while core inflation defied to reflect the softening of various input costs.
RBI said in the 'State of the Economy' section of the report said, "Consumer price inflation remains high and core inflation continues to defy the distinct softening of input costs," RBI said in the 'State of the Economy' section of the report.
Core inflation is the change in the prices of goods and services other than food and energy.
In February 2023, retail inflation in India decreased somewhat but stayed above the RBI's upper tolerance zone of 6% for the second month in a row, with the Consumer Price Index standing at 6.44 percent. Retail inflation was 6.52 percent in January.
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Retail inflation in India has been above the RBI's 6% objective for three consecutive quarters, and it will only return to that level in November 2022.
The RBI is regarded to have failed in managing price hikes under the flexible inflation targeting framework if CPI-based inflation falls outside the 2-6 percent range for three quarters in a row.
To combat inflation, the RBI has raised the short-term lending rate by 250 basis points since May of last year, including the most recent 25 basis point rise. Increasing interest rates is a monetary policy tool that normally helps to reduce demand in the economy, allowing the inflation rate to fall.
Significantly, consumer inflation in the United States fell to 6.0% in February from 6.4% the previous month, but the figures remain much above the 2% objective.
The RBI noted a silver lining in its monthly bulletin, indicating that India emerged from the pandemic years stronger than previously anticipated.
"Even as global growth is set to slow down or even enter a recession in 2023 as global financial markets wager, India has emerged from the pandemic years stronger than initially thought, with a steady gathering of momentum since the second quarter of the current financial year.”
On the supply side, the RBI bulletin stated that India's agriculture sector is experiencing a seasonal rise, while the industry is rebounding from a previous downturn and services have maintained momentum.
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- ANI
