New Delhi: Inflation in India is much higher than satisfactory levels and Asian economies are the exception. Moody’s Analytics, a subsidiary of Moody’s Corporation, said this on Tuesday. Moody’s Analytics, which provides economic research and advises on risk, performance, etc., said higher fuel prices would keep pressure on retail inflation. This will make further cuts in the policy rate difficult for the Reserve Bank of India (RBI).
Retail inflation rose to 5 percent in February from 4.1 percent in January. The Reserve Bank mainly considers retail inflation when considering a monetary policy. Moody’s Analytics said headline inflation (excluding food, fuel, and light inflation) rose to 5.6 percent in February from 5.3 percent in January.
He said that inflation in India is very high. He said in his report that inflation in most countries of Asia is soft and it is expected to pick up in 2021 due to the rise in oil prices and the gradual opening of the economy. This year, global Brent crude has jumped 26 percent to $ 64 a barrel. When the Covid-19 crisis was nearing its peak, it was $ 30 a barrel in March 2020.
According to Moody’s Analytics, “India and the Philippines are the exceptions in terms of inflation. Inflation in these economies is far above satisfactory levels. This is increasing the challenges for the policymakers. ”
He said that India’s inflation is worrisome. Due to the fluctuations in the price of food items and the rapid rise in the price of oil, the retail inflation rate has reached the high limit of 6 percent several times in 2020. This is making it difficult for the Reserve Bank to cut further policy rates. Under the monetary policy regime, the RBI has the responsibility of keeping inflation at 2 per cent with inflation at 2 per cent.
Moody’s Analytics also said, “RBI can maintain the target of keeping inflation within this range even after the current deadline of 31 March.”
