In March, the annual retail inflation of India rose to a 17-month high while there was a contraction in the factory output in February, therefore complicating the policy choices of the nation’s central bank.

Overview

  • The National Statistical Office (NSO) has released the data showing that the retail inflation in March 2022 rose to6.95 percent from a year ago.
  • The retail inflation remains above the Reserve Bank of India’s (RBI) tolerance limit for the third straight month.
  • On the other hand, in February, the Index of Industrial Production (IIP), grew1.7 percent on an annual basis. The data also showed that there was a4.7 percent contraction of the IIP month on month.
  • This contraction shows that the country’s economic revival isn’t yet stable.
Consumer Price Index (CPI)- based inflation
The country’s inflation based on the Consumer Price Index (CPI) was led by the edible canvases (18.79 percent), vegetables (11.64 percent), fish and meat (9.63 percent), light and fuel (7.52 percent), and clothing and footwear (9.4 percent) segments.
Core Inflation
The Core inflation of the country has jumped to a 10-month high and stands at6.29 percent in March from5.96 percent in February.
Reason for the increase in inflation
Due to the gradual fuel price increase from the end of March along with higher commodity prices, structural health affectation, and a weak currency was the reason for the increase in inflation and the rate will keep on elevating at least in the first quarter of FY23.
RBI’s stand regarding the growth of inflation
The Russian-Ukraine war has increased commodity and food prices, forcing the RBI in reassessing the policy stance of the organization. In its latest monetary policy, RBI did n’t change the policy rates but it said that it’ll be prioritizing keeping inflation in check instead of growth incentivization.

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