Based on CPI (Consumer Price Index), Retail Inflation in India has accelerated to 7.34 percent in the September month. Whereas, the same was 6.69 percent in the month of August. Mainly, the rise in food prices contributed to this. This was observable from the data released by the government of India on Monday. Statistics of Inflation is above the comfort level of the Reserve Bank of India (RBI). It is happening from consecutive six months. The government has instructed MPC to tame retail inflation based on CPI at 4 percent (+,- 2 percent).
More About The Inflation :
National Statistical Office(NSO) has released data recently. The rate of rising in price in the food basket was 9.05 percent in the month of August. Whereas, it is 10.68 percent in September. This proves that gradually there is an inflation in the prices.
However, the government has eased the restrictions in lockdown with the aim of reviving the economy. Disruptions of the supply chain have shown little sign of abating. This is due to the rapid spread of this deadly coronavirus in India.
A continuous rise in prices has hurt the recession-stricken economy. It has contracted a record 23.9 percent in April-June quarter despite the RBI cut its key repo rate. Since the pandemic started, the Repo rate has cut by a cumulative 115 basis points (bps).
RBI has held a monetary policy meeting last week. The RBI has decided to not change the key policy repo rate and keep it at 4 percent. Governor of RBI Shaktikanta Das said they are expecting retail inflation close to the aimed level by the final quarter of this fiscal year. Although it is likely to stay up the tolerance level at 6.8 percent for the end of the quarter.
Das further added that this optimism in the expectations is also due to people’s expectations. In RBI’s survey round of September 2020, household expected inflation to come down. They are expecting this decline in inflation over the next three months. This indicates the hope that the supply chain can mend soon.
He said, “Our predictions and projections show that inflation would ease near to the aim by Q4 of 2020-2021.”
A different set of data report is released by the government of India. According to it, production in industries for August declined by 8 percent. it is due to the lower output of the manufacturing, power generating, and mining sectors.