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What does India’s high retail inflation mean for consumers and corporate India


The pain of high retail inflation in India may not ease anytime soon. A percentage point drop from its peak in April and the grievous price rise in advanced economies are no consolation for India. Inflation in India —with the consumer price index at 6.7% in July 2022 — is well above the Reserve Bank of India’s (RBI’s)upper tolerance level of 6%. More disturbingly, economists argue, high inflation will continue for several more months, or even a year, leading to inflation expectations, which could negate RBI’s interventions to rein in inflation.


DK Srivastava, chief policy adviser of EY India, tells ET: “Global supply constraints will continue as there is no sign of an early resolution of the Russia-Ukraine war. Petroleum prices will remain high. In this geopolitical scenario, inflation in India may remain at 6% and above till December 2023.”

Deloitte’s chief economist in India Rumki Majumdar, paints a somewhat optimistic scenario. “We expect inflation to come down to below 6% in the first half of 2023,” she says, adding that inflation will fall more sharply if China, the world’s second largest economy after the US, slows down faster than expected. RBI, too, has projected inflation in India to decline below 6% by the first quarter of FY24.


Read More at https://economictimes.indiatimes.com/news/economy/finance/what-does-indias-high-retail-inflation-mean-for-consumers-and-corporate-india/articleshow/93974048.cms

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