Bikky Khosla | 16 May, 2023
inflation fell to 4.70 percent in April from 5.66 percent
in the previous month. This is the lowest consumer
price index based inflation in last 18 months. Also, for the second consecutive
month, retail inflation fell to RBI’s target range of 2-6 percent. This is a
welcome development, particularly in the light that this moderation is mainly
due to fall in prices of food items, which comprise nearly 50 percent of the
overall consumer price basket.
The RBI Governor reacted
that the latest inflation data proves that the monetary policy
is on the right track, and although he refused to comment if this would led to
change in policy stance of the central bank, it is clear that the softer
inflation provides RBI a much-needed space to become less hawkish. It is
noteworthy here that according to some economists, retail inflation may fall
further towards 4 percent in May.
as per data released Monday, wholesale inflation fell to (-) 0.92 percent in April.
Besides a low base, fall in prices of food, fuel and other input costs played a
key role in this fall. This is the lowest WPI inflation in nearly three years. Wholesale
inflation has for quite some time now showing a declining trend, but this slip
into the negative territory looks remarkable and will certainly provide the RBI
some space it needed.
some experts are still sceptical. RBI’s next monetary policy review is scheduled
in June, and they are of the view that easing policy may not be easy even now
when retail inflation is at an 18-month low level while
wholesale inflation has entered into the negative territory. Finding the right
balance between inflation and growth is indeed a difficult task, but we hope,
the central bank will be able to press the right button in its upcoming policy
I invite your opinions.