The Reserve Bank of India (RBI) said on Thursday that the country's retail inflation has softened after continuously remaining above the tolerable limit since January. The central bank said that the steps taken to control it are expected to come down further. The RBI's Financial Stability Report (FSR) also said that pressure may remain due to the persistence and rise of core inflation. It has been said in the report that RBI has taken continuous steps to bring inflation under control.
Difficulties facing the Indian economy: RBI
This is expected to bring inflation closer to a satisfactory range and target. The central bank further said that along with this, the apprehensions about inflation will also be curbed.
According to the Financial Stability Report, the Indian economy is facing bad global conditions. But the financial system is in a better position due to strong fundamentals and a strong balance sheet of the financial and non-financial sectors. It said that although inflation remains high, it is now softening due to rapid monetary policy steps and intervention at the supply level. The RBI has said that inflation also increases due to the strong US dollar making imports costlier. This especially increases the prices of those commodities, which are imported in dollars.
Commodity prices continue to rise: RBI
Commodity prices in local currency continue to be bullish due to rupee depreciation and remain higher than the average of the last five years in many economies. According to the report, this is a double whammy for poor economies. Due to this, on the one hand, where the prices of commodities increase, on the other hand, it also creates a humanitarian crisis. Regarding the domestic financial situation, the RBI said that monetary policy has been tightened to bring inflation within a satisfactory range as per the target.
RBI has got the responsibility of keeping the inflation between 2 to 6 per cent. The central bank mainly looks at retail inflation at the time of bi-monthly monetary policy reviews. Retail inflation has softened to 5.88 per cent in November after remaining above the upper limit of a satisfactory level ie six per cent since January this year.
