India’s retail inflation to moderate about 5.4 percent in 2023-24 and to which the RBI factors in while deciding its periodic monetary policy, was 4.8 percent in 2024-25 from 6.6 percent in the current financial year 2022-23. Shaktikanta Das Governor of Reserve Bank of India said on Saturday that the next inflation print for October will be lower than 7 per cent.

Consumer Price Index

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The retail inflation in India, which is measured by the Consumer Price Index (CPI), fell to a three-month low of 6.77 percent in October 2022, it has offered relief, with the print only marginally exceeding expectations and recording a healthy sequential down from 7.41 percent in September.

With the CPI inflation, Under the flexible inflation targeting framework introduced in 2016, the RBI’s tolerance band is 2-6 percent. The Central Government has mandated the RBI to maintain retail inflation at 4 percent with a margin of 2 percent on either side for a five-year period ending March 2026.

Monetary Policy Committee

The Monetary Policy Committee (MPC) of the Reserve Bank of India was held under Governor Shaktikanta Das on November 3 to discuss and the draft report to be sent to the Central Government for having failed in maintaining the inflation mandate.

RBI is found to have failed in managing price rises if the CPI-based inflation is outside the 2-6 percent range for three quarters in a row. Whatever this is the 10th consecutive time that the Customer Price Index (CPI) print has come above the Reserve Bank of India’s (RBI) upper margin of 6 percent.

Macroeconomic Fundamentals

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On the Indian economy, “Das said the Macroeconomic Fundamentals remain strong and growth prospects are looking good”.

The overall outlook was in line and India will continue to be fastest growing major economy with a likely growth rate of 7 percent in 2022-23 on the back of strong macroeconomic fundamentals and the financial sector stability.

According to the Data released earlier today showed India’s annual Wholesale Price-based Inflation (WPI) eased in October to 8.39 percent on-year, the lowest since March last year, helped by a fall in commodity prices. The Reserve Bank of India has raised its main repo rate by a cumulative 190 basis points since May to 5.90 percent to tame inflation. The October WPI inflation was lower according to the Reuters.

Das said the macroeconomic fundamentals remain strong and growth prospects are looking good on the Indian Economy. He also added that the market turmoil is mainly emanating from synchronized monetary policy tightening across the world by central banks, especially those in advanced countries, led by the US Fed.

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