13 May 2023, Bengaluru, India
India’s consumer price index-based inflation rate has come down to an 18-month low at 4.6 percent. It is reportedly said to be within the Reserve Bank of India’s comfort zone for a second month. This is happening due to a fall in moderating food prices.
As per the latest data produced by the National Statistics Office (NSO), the inflation rate has deliberately come down to 4.6 percent in April from a whopping 6.44 percent in February. Retail inflation stood at 5.66 percent in March.
Upasana Bhardwaj, the chief economist present at Kotak Mahindra Bank, said,“We are looking at April and May being the bottom on inflation and then we start seeing slight upward movement above 5 per cent, although below the RBI’s 6 per cent.”
The latest reports show the recent drop in the consumer price index-based inflation rate comes in April after a decline in food prices. The reports also show that food price inflation dropped to 3.84 percent from 4.79 percent.
NSO’s latest report also provides further data highlighting that rural inflation was 4.68 percent in April, and urban inflation at 4.85 percent. Economists had predicted that inflation rates would decrease around April.
The central bank, which maintained key rates steady in its most recent policy review following consecutive hikes, is relieved by the development. With this, the RBI is probably going to stop raising rates for the rest of the year.
“The near term looks comfortable in terms of inflation. But eventually, the RBI will have to target real rates being higher than 1 percent. For that to be sustained, they will have to be on a pause. A rate-cutting cycle at this moment may be slightly premature,” Bhardwaj further added.
Source – India Today
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