It has been asserted that the index’s slight decline is a positive indicator, however given how the index has moved over the past few months, this claim seems unconvincing. After falling below the upper threshold in November and December of last year, inflation is now over it for the second consecutive month, which may potentially signal a trend reversal. It has remained above the 6 % limit for 12 of the past 14 months. During the current quarter, the Monetary Policy Committee of the RBI had predicted an average rate of 5.7%. This does not seem to be possible presently.
Source: The HinduCloser examination of the data reveals that most index members and industries have seen pricing pressure. Although costs for vegetables have decreased, they have increased for cereals, milk and milk products, prepared meals and snacks, and spices. The past six months have seen double-digit increases in cereal inflation. The spike in temperatures across the nation has made the prognosis for the month of Ramadan less than ideal. While core inflation is significant, pricing pressures are present across all industries and commodities.The majority of products, including apparel, home goods and services, and health care, have been impacted. Cost increases are to blame for the price rise in many areas, but even if expenses decrease, prices won’t go down.
Source: CNBC Television This limits the RBI’s options for handling the circumstance. Early in the next month, the MPC will meet to deliberate on a response to inflation. Since May of last year, it has increased the benchmark repo rate by 250 basis points. Nonetheless, it still doesn’t seem to have control of the circumstance. The MPC hinted at the possibility of taking additional calibrated monetary policy action at its most recent meeting to address the persistence of core inflation.
The most recent inflation statistics support this opinion. Yet, some people believe that a pause may be necessary because ongoing rate increases hinder growth and should be given time to affect the economy.
After the failure of the Silicon Valley Bank in the US, central banks might also be concerned about the effects of ongoing rate increases on the banking industry. Yet, the RBI would still consider reducing inflation to be its primary goal.
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