As per the minutes of the latest monetary policy meeting released recently, there have been several mentions of uncertainties around inflation. Going ahead, food price uncertainties would continue to weigh on the inflation outlook, according to the minutes.
Wholesale inflation in India, based on the Wholesale Price Index, came in at 1.26 per cent in April versus 0.53 reported in March, official data from the commerce ministry showed on Tuesday.
Thus, it remained in positive territory for the sixth month after remaining in the negative zone for seven months until October.
The positive rate of wholesale inflation in April was primarily due to an increase in prices of food articles, electricity, crude petroleum and natural gas, manufacture of food products, other manufacturing.
Economists On Inflation Rise
Economists often say a little rise in wholesale inflation is good as it typically incentivizes goods manufacturers to produce more.
In April last year, the wholesale inflation went into negative territory. Similarly, in the initial days of COVID-19, in July 2020, the WPI was reported negative.
Overall wholesale inflation was 8.39 per cent in October 2022 and has fallen since then. Notably, the wholesale price index (WPI)–based inflation had been in double digits for 18 months in a row till September 2022.
The government releases index numbers of wholesale prices on a monthly basis on the 14th of every month (or the next working day). The index numbers are compiled with data received from institutional sources and selected manufacturing units across the country.
Retail Inflation In India
Meanwhile, retail inflation in India eased a tad in March to 4.83 per cent from 4.85 per cent the prior month.
The retail inflation in India though is in RBI’s 2-6 per cent comfort level but is above the ideal 4 per cent scenario, and food inflation particularly is a concern.
Barring the recent pauses, the RBI has raised the repo rate by 250 basis points cumulatively to 6.5 per cent since May 2022 in the fight against inflation. Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
As per the minutes of the latest monetary policy meeting released recently, there have been several mentions of uncertainties around inflation. Going ahead, food price uncertainties would continue to weigh on the inflation outlook, according to the minutes.
Pressure in food prices has been interrupting the ongoing disinflation process in India, and posing challenges for the final descent of inflation trajectory to the 4 per cent target, as per minutes of latest RBI’s monetary policy.
(With Inputs From ANI)