Inflation is the term used to describe the rate at which prices increase. Rising prices mean your money buys you less in the future than it does today.
According To Official Data, The annual Inflation Rate In India increased to 6.95 percent in march 2022 (Highest Since October 2020)
Similarly, The wholesale price Index in March At 14.5 Percent, Was the Second highest Since 2012.
Evidently, India’s economy faces a twin challenge because the current spike in Inflation is the result of the steep price rise of crude oil (Crude Petroleum had risen to 83.56% in March from 55.17% during February and other commodities across the World.Â
Inflation is Critical to determining one’s purchasing power. In other words, Inflation is a measure that causes the Prices of both Goods And Services to rise over time and buyers will feel the pinch as it affects their personal finance, particularly spending and buying habits.
Two Indices Are Used To Measure Inflation In India :
- The Consumer Prices Index (CPI)
- The Wholesale Price Index (WPI).
Inflation has increased import costs for some essential commodities.
The Govt admits that the current Geopolitical situation and soaring prices may slow down growth even as Inflation remains high.
Ironically it is happening at a time when the world economy is already caught off guard by the coronavirus pandemic and is steadily trying to boost the pace of growth.Â
Recently, anti Inflationary measures and for the first time since 2018, Indian Central Bank, RBI raised the Repo Rate by 40 basis points to 4.4 percent.
The RBI Rate hike is to control and monitor money flow into the banking system in the face of a global economic downturn.
Consequently, due to the rise in the Repo Rate, Bank Loans, and EMIs will go up and affect the Pocket Of Consumer Who will be compelled to pay more money every month, which He/She could have saved or could have invested somewhere else and would have earned a return from it.
India is a consumption-driven economy and high Inflation will potentially have a bearing on its growth and resources.Â
Thus the country needs to work on Growth Trajectory. While Domestic Factors Can Be Mitigated, It is the external pressure That is needed to be in focus.
To add to the wound, IMF Lowers India’s Growth Projection To 6.8% In 2022-23.
The Indian Economy Encountered The Double blow of rising retail Inflation in September 2022 And An Unexpected Index Of Industrial Production contraction in August 2022
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