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Inflation Data: Due to the decline in food items, the retail inflation rate has come down to 11-month low of 5.88 percent in November. From the government to the RBI, they are heaving a sigh of relief. In April 2022, when the retail inflation rate reached the level of 7.79 percent, since then the RBI has increased the repo rate five times to crack down on it through monetary policy. RBI increased the repo rate from 4 percent to 6.25 percent in 7 months. As a result, the EMI of the people became expensive. Means double whammy of inflation. But the question arises that will the common people benefit from the fall in inflation rate?
relief in food inflation
The prices of food items, especially vegetables and fruits, have come down, so the retail inflation rate has come down. And if the trend of reduction in food items continues in the future, then the retail inflation rate may come down further. It is a matter of relief for India that the prices of crude oil have come down in the international markets and it has come down to below $80 per barrel. Whenever the government decides to reduce the prices of petrol diesel, it will reduce the prices of fuel, which will reduce inflation. Because traveling to freight will be cheaper. If the government accepts the suggestions of the Kirit Parikh Committee, formed to fix the prices of domestic gas, then CNG-PNG will also be cheaper, which can reduce inflation.
Break on rising interest rates
A decrease in the retail inflation rate means that there may be a break in the process of loan being expensive. RBI has increased the repo rate five times in 2022. But in December 2022 and January 2023, if the retail inflation rate remains below the upper band of RBI’s tolerance level of 6 percent, then in the monetary policy meeting to be held in February 2023, RBI may apply brakes on increasing interest rates. That is, there will be no increase in the repo rate. But it will take time to get relief from expensive debt. According to former Chief Economic Advisor of SBI Vrinda Jagirdar, RBI had said that there is a trend of decreasing inflation in future. There will be less worry about inflation. If the inflation is low, then RBI will not make any change in the repo rate in the upcoming monetary policy and will keep it at the current level.
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Will there be relief from expensive EMI?
According to Vrinda Jagirdar, even though there has been a decrease in the retail inflation rate, there is no hope of reduction in the interest rates as many countries of the world are troubled by inflation. In such a situation, if India imports any goods from these countries, then inflation will also be imported along with it. He said that even though we have got relief from domestic inflation, the danger of imported inflation still remains. That’s why there is a need to keep an eye on it. Also, a lot will depend on the monsoon in June next year. He said that in 2022, India had to bear the brunt of the unseasonal rains.
Worry about inflation
The worry about inflation is not over yet. That’s why Finance Minister Nirmala Sitharaman also said in Parliament that the government is keeping an eye and will take all steps to reduce inflation. Means the government is also afraid that it will take time to get complete relief. Experts believe that even though there has been a decrease in the retail inflation rate in November, an increase can be seen in the month of December and January. Because now there is relief only from food inflation but core inflation still remains high. Also, until the inflation in America and Europe does not come down, it would be futile to expect cheap loans.
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