India Inflation Data: The Reserve Bank of India, while announcing the credit policy after the Monetary Policy Committee meeting on October 9, 2024, had kept the repo rate at 6.50 percent. But the committee made its stance neutral, indicating that RBI may reduce its policy rate in the Monetary Policy Committee meeting to be held in December 2024. But after the figures of Retail Inflation Rate have been declared on October 14, 2024, it is very unlikely that RBI will reduce the repo rate in the month of December because in the month of September, retail inflation will be below the tolerance band of RBI 4 percent. It has reached 5.50 per cent, much above Rs.
Inflation of vegetables increases concern
The main reason for the rise in retail inflation is food inflation, which has reached 9.24 percent in the month of September, which was 5.66 percent in August. The inflation rate of vegetables was 35.99 percent in September, which was 10.71 percent in August. Wholesale inflation rate figures were also announced on October 14, according to which the WPI Food Index has reached 9.47 percent in September 2024, which was 3.26 percent in August. According to the wholesale inflation rate data, the inflation rate of vegetables was 48.73 percent in September. The inflation rate of potato has been 78.13 percent, that of onion has been 78.82 percent. It is clear from these figures that there is very little possibility that there will be relief from the inflation of food and vegetables soon.
Hopes of cheap loans dashed
Experts also believe that the retail inflation figures revealed may have an impact on the Monetary Policy Committee’s decision to reduce interest rates. According to Nish Bhatt, Founder and CEO of Millwood Kane International, the increase in retail inflation has come due to the rise in food inflation. Abnormal monsoon has caused damage to crops in many areas of the country, which may continue in October as the withdrawal of monsoon is getting delayed. Core inflation has also been 3.5 percent which is higher than expected. In such a situation, the impact of retail inflation data can be seen on the decision taken by MPC on interest rates. Unless a downward trend in inflation is seen, the chances of cutting interest rates are very less.
RBI will not take decision in haste
Vivek Rathi, National Director Research, Knight Frank India, says, the rise in retail inflation is in line with expectations of increase in household inflation. He said, at present, the pattern of inflation rate in India is different from the global trend where due to reduction in inflation, the Central Bank there is cutting interest rates. But considering the inflation situation in India, it is very unlikely that RBI will cut interest rates in a hurry.
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