RBI’s report on inflation front is a relief, inflation will come down to this level in the next financial year
Highlights
- Inflation forecast for 2022-23 retained at 6.7 percent
- The responsibility of the central bank to keep inflation between 2-6 percent
- In April, inflation had reached an all-time high of 7.8 per cent.
Dearness Continuing high levels of ED continues to be a significant policy concern for the Reserve Bank of India (RBI), but the pressure is likely to ease in the next financial year on the back of normal rains and easing of disruptions in global supply chains. This estimate has been expressed in a report of RBI. This RBI report said that in the next financial year starting April 2023, retail inflation will come under control and its level is expected to be 5.2 percent. It is estimated to be 6.7 per cent in the current financial year.
Expected increase due to better monsoon
In the ‘Monetary Policy Report September 2022’, RBI said, “Inflation will average 5.2 per cent in FY 2023-24 in the event of a normal monsoon, continued removal of disruptions in supply chains and no other external or policy shocks.” Since January 2022, the inflation level has remained well above the RBI’s satisfactory upper limit (six per cent). Inflation hit an all-time high of 7.8 per cent in April, although it has started to decline later, yet it remains at an unacceptably high level. To control inflation, the RBI on Friday increased the policy rate repo by 0.5 percent to 5.9 percent. RBI has retained the inflation forecast for the financial year 2022-23 at 6.7 per cent. It is expected to be around 6 per cent in the second half.
Inflation forecast for 2022-23 remains at 6.7%
RBI has retained its inflation forecast for the current fiscal year 2022-23 at 6.7 per cent, amid challenging global geopolitical situation arising out of the Russia-Ukraine war. It is expected to be around 6 per cent in the second half. Inflation is estimated at 6.5 per cent for the third quarter and 5.8 per cent for the March quarter. It is noteworthy that in August, inflation based on the Consumer Price Index was 7 per cent, which is above the satisfactory level of RBI. The central bank has been given the responsibility of keeping inflation in the range of 2-6 per cent. In the first quarter of the next financial year, the retail inflation rate is expected to be 5 percent.
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