India’s Inflation Outlook
India’s retail inflation is set to bring relief to common people as it may come down to 5 percent by March 2023, according to a recent report by SBI Research.
Positive Trends in Retail Inflation
The report highlights that retail inflation, based on the consumer price index, is expected to remain below the Reserve Bank of India’s (RBI) 6 percent target. During January-March 2023, the average retail inflation rate stood at 4.7 percent, indicating a positive trend.
Continuing Decline in Inflation
Recent data from the Ministry of Statistics reveals that retail price inflation was 5.72 percent in December. Fortunately, the latest figures, released just last week, show a slight decline. This suggests that retail inflation is on a path to further ease in comparison to the previous month.
A Downward Inflation Trajectory
In November, retail inflation in India dropped to 5.88 percent from 6.77 percent in October. It’s noteworthy that Indian retail inflation has been above 6 percent for over three quarters leading up to October, which is higher than what the RBI prefers.
Factors Contributing to the Decline
Mr. Soumya Kanti Ghosh, Group Chief Economic Adviser at the State Bank of India, shed light on the reasons behind this decline. He explained that consumer price index (CPI) inflation is expected to touch a 12-month low of 5.72 percent in December 2022. This decline can be attributed mainly to the drop in vegetable prices. Farmers have adopted innovative methods of seed planting, enabling them to make more accurate predictions about weather conditions and use advanced technology.
Consistent Decline in Retail Inflation
It’s notable that retail price inflation has now remained below the 6 percent mark for two consecutive months. December recorded a retail inflation rate of 5.72 percent, following a rate of 5.88 percent in November. Currently, the retail inflation rate in the country has reached its lowest point in a year.
Impact of Food Prices
The decrease in food prices, particularly vegetables, has played a pivotal role in maintaining inflation at a manageable level. Food inflation, accounting for about 40 percent of the inflation basket, decreased to 4.19 percent in December from 4.67 percent in the previous month.
India’s inflation rate is showing positive signs of decline, offering relief to everyday citizens. The decrease in vegetable prices and advancements in farming techniques have contributed to this downward trajectory in retail inflation. As we move forward into the new year, these trends are expected to persist, bringing much-needed economic relief to the common people.