Retail Inflation: Rising inflation may increase RBI’s troubles, growth may get a setback

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Retail inflation reached the highest level of the last six months in the month of May. It is increasing continuously, which is a matter of concern for the Reserve Bank. Retail inflation has crossed the RBI’s maximum range of 6 per cent, so will it think of a rate cut?

In May, the retail inflation rate crossed the RBI limit.

Retail inflation: Retail inflation is increasing steadily. In May, retail inflation rose to 6.3 per cent from the Reserve Bank’s maximum range of 6 per cent. This is the highest in the last six months. If this rate of inflation continues to rise or it remains outside the Reserve Bank’s range of 2-6 per cent, then it will be difficult for monetary policy to focus on growth. The next meeting of the Reserve Bank Monetary Policy (RBI MPC Meeting) is to be held in August.

Regarding the increase in inflation rate in May, economic experts say that the Reserve Bank will not take any decision regarding the increase in the repo rate. However, special discussion on rising inflation will be necessary. Economists say that it is not possible to accelerate the inflation rate before 2022. However, there is a possibility that the Reserve Bank of India will increase the reverse repo rate in the December quarter. RBI Governor Shaktikanta Das has said on several occasions that as long as it is necessary to improve the economy, the Reserve Bank will stick to a liberal policy.

No change in repo rate for the seventh time in a row

In May, the retail inflation rate was 6.3 percent, while in the month of April, the retail inflation rate was 4.23 percent. This figure of Retail Inflation is important because on the basis of this the Reserve Bank handles its monetary policy. There was an important meeting of RBI MPC last week. In this, the Reserve Bank had decided not to make any change in the repo rate for the seventh time in a row. At present the repo rate is 4 percent and the reverse repo rate is 3.35 percent. At that time, Governor Shaktikanta Das said that RBI is ready to take all necessary steps for economic recovery.

Inflation target 5.1% for the current financial year

The Reserve Bank of India has estimated retail inflation at 5.1 percent for the financial year 2021-22. According to it, retail inflation has been estimated to be 5.2 percent in the June quarter, 5.4 percent in the September quarter, 4.7 percent in the December quarter and 5.3 percent in the March quarter.

The rise in crude oil is a matter of concern

It is believed that the RBI can increase the inflation target for the current financial year. The way the price of crude oil is increasing, it is a matter of concern. On one hand the price of crude oil is increasing in the international market, on the other hand the government is increasing the tax. Crude oil accounts for 90 percent of the refinery product. Transportation cost also increases due to the cost of petrol and diesel. This increases the food cost.

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Bhagyashree Soni
Bhagyashree Soni
Bhagyashree Soni is a software engineer with soft writing skills. She is a degree holder from the International School of Entrepreneurial Leadership. She has been a state-level badminton champion and chess player. A woman with a forthright attitude enjoys her writing passion as her chosen career. Writing in the context of feminism, social-cause and entreprenurship is her forte.
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