Economic slowdown

Inflation, however, went beyond the RBI’s (Reserve Bank of India) upper band target for 10 straight months. According to the law, the RBI is supposed to keep inflation within a bracket of 2 to 6 per cent. Food inflation was recorded on weaker side to 7 per cent in October from 8.6 per cent in September

The retail inflation, measured by the consumer price index (CPI), altered to 6.8 per cent in October as food prices softened, revealed data released on 14 November from the statistics ministry. The inflation print was 7.4 per cent during September and 4.5 per cent in October 2021.

Inflation, however, went beyond the RBI’s (Reserve Bank of India) upper band target for 10 straight months. The hiked inflation may further tighten the interest rates. Since May 2022, the RBI has raised interest rates by 190 basis points to 5.9 per cent after sustaining them record-low at 4 per cent throughout the pandemic.

According to the law, the RBI is supposed to keep inflation within a bracket of 2 to 6 per cent. The regulator, by writing to the government asked to furnish the reasons for breaching the inflation over three successive quarters.

Food inflation was recorded on weaker side to 7 per cent in October from 8.6 per cent in September.

What the category-wise inflation says:

The food and beverages Inflation was at 7 per cent along with inflation in vegetables at 7.7 per cent and spices at 18 per cent. The clothing, footwear, housing and fuel and light inflation stood at 9.8 per cent, 12.2 per cent, 4.6 per cent, 9.9 per cent, respectively.

Impact on Growth

India’s growth rate was majorly impacted by high inflation. The RBI, in its latest policy meeting on during 28 to 30 September brought down the FY23 gross domestic product projection to 7 per cent from 7.2 per cent earlier.

The International Monetary Fund made revision in India’s FY23 GDP projection to 6.8 per cent from 7.4 per cent of July estimate. FY23 inflation is pegged at 6.7 per cent.