Has inflation come down in India? | Good news for the country's economy.

 

Has inflation come down in India?

 

Relief news has come for the people who are facing the brunt of inflation. There seems to be a brake on the skyrocketing prices year after year. A decrease is being seen in the prices of vegetables and food items. The prices of electricity and fuel have also come down and its effect is visible on the retail inflation rate of the country. 

A decline is being registered in the country's retail inflation. Inflation has come down for the last few consecutive months and has reached an 18-month low. Let's know the complete news. In April, the retail inflation has come down to below 5% and there has been a decline of about 1% in it. The retail inflation rate in April 2023 is at 4.7%. 

Whereas earlier in March, the inflation rate was at 5.66%.This is the third consecutive month when a decline in the inflation rate has been recorded and this is the second consecutive month. When the inflation rate based on the Consumer Price Index has been less than the RBI's fixed target of 6%. 

Let us tell you that the April figure is 18 months low for the country's retail inflation. In October 2021, the inflation rate had reached 4.5%. If you look at the statics, the retail inflation rate in January was 6.52%, 6.44% in February. In March it was 5.66% and in April the figure reached 4.70%. A year ago, the inflation rate in April was 7.79%. 

Let us understand retail and wholesale inflation from the perspective of inflation. You and we buy goods from the retail market as a consumer. The Consumer Price Index i.e. CPI does the work of showing the changes in the prices associated with it. The CPI measures the average price we pay for goods and services.

 

Except for crude oil, commodity prices, manufactured costs, and many other factors play a very important role in deciding the retail inflation rate. There are about 300 items based on whose prices the rate of retail inflation is fixed. The same wholesale inflation means business in the wholesale market from one trader to another.

 

It is also called Wholesale Price Index i.e. WPI. The rise and fall of inflation depends on the demand and supply of the product. If people have more money, they will buy more things. Buying more things will increase the demand for things and if there is no supply according to the demand, the price of these things will increase. 

In this way, the market becomes vulnerable to inflation. In simple words, an excessive flow of money in the market or a shortage of things causes inflation. The same demand will be less and the supply will be more so the inflation will be less. If we talk about how inflation affects our pocket, then its direct connection depends on our purchasing power i.e. the ability to buy things. 

By the way, if the inflation rate is 7%, then the value of ₹ 100 lying in your pocket has become ₹ 93. In this case, you will be able to buy items worth only ₹ 93 for ₹ 100. If we look at the retail inflation data for April 2023, a decline has also been registered in rural and urban inflation. Rural inflation stood at 4.8% in April, compared to 5.5% in March. 

The urban inflation rate stood at 4.85%, which stood at 5.89% in March. April's core inflation stood at 5.2%, compared to 5.8% in March. Due to the decline in food and fuel inflation, there has been a decline in retail inflation. Energy prices have also come down and prices of cereals and vegetables have softened.

Due to this, there has been a decline in CPI-based retail inflation. According to the NSO, the Consumer Price Index declined to 3.84% in April, compared to 4.79% in march and 8.31% in the year-ago period. Retail inflation was projected to increase from 5.7% in December 2022 to 6.4% in February 2023 due to higher prices of cereals, milk, and fruits and a slower decline in vegetable prices.

 

In April, the inflation rate of vegetables saw a decline of 6.50%. The decline in March stood at 8.51%. On a month-on-month basis, the inflation rate in electricity and fuel declined from 8.91% to 5.52% in April. Along with this, the country's industrial production increased by 1.1% in March, while its growth rate was 2.2% in the same period a year ago. 

On the other hand, the fall in inflation is good news for the poor. This class, which is facing the brunt of rising prices, is now feeling some relief. Experts say that the fall in inflation is also good news for the country's economy. Improvement in the supply chain and relief in commodity prices have also benefited. 

Explain, to reduce inflation, the liquidity in the market is reduced. For this, RBI increases the repo rate, due to which the interest rate of our loan increases. Now after the retail inflation data, it is expected that in the next month from June 6 to 8, RBI's monetary policy meeting can be relaxed regarding the repo rate. 

In such a situation, cheap loans can be expected. RBI Governor Shaktikant Das has expressed happiness over the decline in retail inflation. He said that the fall in the inflation rate indicates that the monetary policy is going in the right direction.