Table of Contents
As per government data released by The Ministry of Statistics and Programme Implementation on Monday, retail inflation rate around the country has dipped marginally to 6.44 per cent in the month of February. The main reason for the dip is the slight easing in prices of food and fuel items.
The Consumer Price Index (CPI) based inflation was about 6.52 per cent in the month of January while 6.07 per cent in February 2022. The inflation rate for the food basket was 5.95 per cent in February which was 0.05 per cent lower than in January.
Retail inflation in the month of January was at its 3-month high level, breaching the Reserve Bank of India’s (RBI) upper end of the tolerance level. The rate remained within the level for 2 months before that.
The government advices the central bank (Reserve Bank of India) to ensure that the retail inflation remains at 4 per cent with a margin of 2 per cent high or low.
Except for two months (November and December 2022), the retail inflation has remained above the RBI’s upper tolerance level of 6 per cent since January 2022.
DATA COLLECTION TO CALCULATE RETAIL INFLATION
As per the MoSPI, the data for the prices and inflation is collected from selected 1114 urban markets and 1181 villages covering all States/UTs through personal visits by field staff of Field Operations Division of NSO, MoSPI on a weekly basis.
During the month of February 2024, NSO collected prices from 100% villages and 98.3% urban markets while the market-wise prices reported therein were 90.4% for rural and 93.3% for urban.
In order to curb the rising prices around the country, the RBI has hiked interest rates by 250 basis points since May last year. The Monetary Policy Committee hiked the repo rate for the by a 25 basis points (bps) to a new 6.5%. on 8th of February.
*The retail inflation refers to the inflation rate of a country measured by the annual change in the consumer price index (CPI). The CPI tracks the change in retail (selling) prices of goods and services, which are purchased by households for their daily consumption.
BASE YEAR TO CALCULATE INFLATION
The Consumer Price Index is calculated with reference to a base year, that is considered as the benchmark. The price change in relation to that year gives the estimate of Inflation. While calculating the CPI, the price of the basket in the year in consideration has to be first divided by the price of the market basket of the base year which is then multiplied by 100.
The National Statistical Office (NSO), Ministry of Statistics and Programme Implementation released the data on retail inflation at the All India Consumer Price Index (CPI) on Base 2012=100 for the month of February.
Overall, Inflation is the rise in prices of goods used for consumption across an economy, and since 2022 it has emerged as one of the biggest threats to global prosperity.
When prices of goods across the nation rise unexpectedly, purchasing power of individuals decreases , which triggers demands for raises which then cause more inflation.
READ NEXT: https://tdznkwjt9mxt6p1p8657.cleaver.live/decoding-the-silicon-valley-bank-failure/
