New Delhi: Retail inflation is getting out of control of RBI. The more RBI is trying to bring it down, the more it is getting out of reach. After touching the 7 percent mark in August, retail inflation is now seen reaching a five-month high in September.
In a Livemint survey conducted among economists, it has been found that due to the increase in the prices of food items, the retail inflation figures in September may be the highest since April. A survey among 24 economists has found that the rate of retail inflation is likely to reach 7.3 percent in September, which was 7 percent in August. However, economists have predicted that in the coming few months, the trend of inflation will be on sloping back.
With this estimate, this will be the 9th consecutive month while the rate of retail inflation will be outside the Reserve Bank’s fixed range. The Reserve Bank is trying to keep the rate of retail inflation within 6 percent, but at present, inflation has not come under its purview even once in the year 2022. In this survey also, the rate of retail inflation is estimated to be in the range of 7.03 percent to 7.50 percent. The government will release the retail inflation data on October 12.
Retail inflation continued to decline till July
There was a steady decline till July before the rebound in inflation. From April to July, the rate of retail inflation was going down continuously, but from August it started rising again. If we look at the figures for September last year, the rate of retail inflation had gone up to 4.35 percent, which was the lowest in 17 months.
Rising prices of fruits and vegetables and grains
Bank of Baroda’s Chief Economist Madan Sabnavis says that along with fruits and vegetables, the prices of cereals and canned food items are also increasing wildly, due to which the figures of retail inflation in September can go up. Prices of various categories of personal products and household items are also increasing rapidly, which can increase inflationary pressure.
What is the Reserve Bank’s estimate?
RBI has so far increased the repo by 1.90 percent to bring retail inflation under control. Also, in the recent MPC meeting, it has also been predicted that the rate of retail inflation will come down in the coming few months. According to the Reserve Bank, the rate of retail inflation in the October-December quarter may be in the range of 6.5 percent, while in the March 2023 quarter, it may reach in the range of 5.8 percent. Economists from other countries along with RBI are also justifying this estimate and they believe that from the beginning of next year, retail inflation will start coming down.
