India’s inflation trajectory going forward is expected to be benign with headline retail inflation potentially printing at less than 5 percent in March 2023, Business Standard stated quoting a State Bank of India (SBI) report.
As per the report, CPI (consumer price index) numbers for March 2023 could be even lower than 5 percent, if July CPI numbers are closer to 6.5-6.6 percent, which is a likely possibility.
It is important to note that India’s CPI inflation has remained above the upper band of the RBI’s mandated 2-6 percent range for six straight months up to June 2022. The June inflation print came in at 7.01 percent while the RBI’s medium-term target for CPI inflation is 4 percent.
According to Reuters, India's retail inflation is likely to ease in July due to a fall in food and fuel prices but will stay above the Reserve Bank of India's upper tolerance limit for a seventh consecutive month.
The August 2-9 Reuters poll of 48 economists showed inflation, as measured by the consumer price index (CPI), likely fell to an annual 6.78 percent in July, a five-month low.
Upside risks to domestic inflation increased significantly after Russia’s invasion of Ukraine in late February led to a spurt in global commodity prices, stated BS.
It also said that the Reserve Bank of India has raised the repo rate by 140 basis points to 5.40 percent since May to tackle high inflation. The central bank has projected CPI inflation at 6.7 percent in the current fiscal year and at 5 percent in the first quarter of 2023-24 (April-March).
Governor Shaktikanta Das warned that persistently elevated cost of living conditions could translate into higher wages and inflation, which is unlikely to fall within the top end of the mandated target band until December.