India’s inflation rate may rise to 6.9%, breaking the 3 months downtrend. In July-2022 the inflation eased by 30 points at 6.71%, a six-month low, and by 60 points in the month of June-2022 at 7.01%. The current average CPI is at 6.8% for the second quarter, while the RBI had forecasted the average at 7.1%.
The National Statistics Office released the Inflation data at 5:30 pm today for the month of August-2022 at 7 percent. The rate hovering above the tolerance of RBI rate between 2-6%. In contrast, the food inflation rate can be seen rising to 7.62 percent, compared to 6.75 percent in July-2022. However, fuel prices gave some relief after falling to 10.78 percent compared to July-2022 at 11.76 percent.
Earlier, in an interview with a news channel, the RBI (Reserve Bank of India) said that inflation is rising globally He also added that according to the RBI assessment, India’s inflation will not cross the highest of April-2022 at 7.8%, and will start down-trending soon. India has already reached its peak and may go down to 5% by next year. As economic activities are reviving after the pandemic, the priority will be to bring growth to the economy.
With the sharp slide in Global Oil prices, India seems to have some significant relief. India is the third biggest consumer and importer of crude oil. The price has fallen from 110 dollars per barrel to 94 to 95 dollars per barrel. Finance Minister Nirmala Sitharaman said on Thursday that it will import oil from Russia despite the pressure and sanction on the country. It will take advantage of the current situation and keep buying from Russia to keep inflation under check.
Despite the fall in Crude oil prices, the retail price of petrol and diesel will not be changed. Oil minister Hardeep Singh Puri in an interview said that the price of petrol and diesel were already low even when the international prices were already high. The country has yet to recover from those losses.
Meanwhile, food inflation has taken a giant hit and is the only worry. Food accounts for nearly half of the Consumer Price Index. The unpredictable monsoon across the country can further damage the growth of the crop, and food prices will keep rising for the next few months.
The Global Commodity price can be seen showing some recovery this week. Gold prices in India traded lowest for the month after MCX futures fell to 0.2% at Rs 50436 per 10 grams. However, the silver price rose by 0.7% to Rs 55417 per kg.
The pressure on the Reserve Bank of India is raising to hike the interest rate in the upcoming months, but the monetary policy for hiking the Interest rate alone will not have much impact to match inflation.
