India's CPI Inflation has been steadily declining after RBI raised the policy Repo rates by 250 bps over a period of about 18 months.CPI for Nov 23 has come in at 5.55% as against the RBI's upper band limit of 6%. CPI in Oct 23 was lower at 4.87%.
1. Food prices: According to the official press release from the Ministry of Statistics and Programme Implementation, the rise in food prices was the main driver of the overall inflation increase. Specifically, vegetables, fruits, and pulses saw notable price increases.
2. Global factors: The ongoing war in Ukraine and global supply chain disruptions continue to put upward pressure on prices for various commodities, including food and energy. This can indirectly affect India's inflation even if domestic oil prices remain unchanged.
3. Base effects: The November 2022 CPI figure was relatively low at 4.9%. This means that the year-on-year comparison for November 2023 naturally appears higher due to the lower base from the previous year.
RBI Repo rate hikes have really kept the CPI rate at a leash.
But it should also be said that because the Retail prices of Oil- Diesel and Petrol have been held without a change for more than 600 days running now, it has helped in taming the domestic inflation by shutting off import of inflation through Crude oil price fluctuations.
Going forward RBI should keep this in mind while reviewing its monetary policy stance since Oil prices fluctuations have not rocked the inflation boat!
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