Inflation will gradually come down in the long run, know what RBI says on this?

RBI has increased the repo rate by 2.50 percent from May 2022 to February 2023 in the fight against inflation. NSO has released the retail inflation data on Monday. In which retail inflation declined sharply to 4.25 percent in May, which is the lowest level in two years.

Explaining the rationale behind the pause in rate hikes in the last two MPC meetings, Reserve Bank of India Governor Shaktikanta Das on Tuesday said that the process of deceleration in prices of products and services in India is likely to slow down and inflation of 4 per cent is expected. It may take some time to reach the target. RBI Governor said that the Monetary Policy Committee has not made any change in the policy rate in two meetings, which means that it has become a pivot, the panel is assessing the effect of the previous work done.

How did inflation come down in the country

Speaking at the summer meeting organized by the Governor Central Banking, London, UK said that barring the recent pause, the RBI has increased the repo rate by 2.50 per cent from May 2022 to February 2023 in the fight against inflation. NSO has released the retail inflation data on Monday. In which retail inflation declined sharply to 4.25 percent in May, which is the lowest level in two years. From the mid of 2022, RBI has continuously tightened the monetary policy. Due to which there has been a huge decline in inflation in India.

India's retail inflation was above the RBI's 6 percent target for three consecutive quarters and in November 2022 the figure came down to 6 percent. If the CPI based inflation exceeds the limit of 2-6 per cent for three consecutive quarters, then the RBI is considered to have failed in price hike management.

Emphasis on economic growth

Das said that if there is no stability in prices, the possibility of financial turmoil will be high. The RBI panel prioritized economic growth during the pandemic years, even if inflation remained above the target. India's GDP was 5.8 percent in FY 2021, but in FY 2022 the same growth had come down to 9.1 percent and in FY 2023 economic growth was seen at 7.2 percent. Das said that due to the demographic dividend, we cannot remain oblivious to the concerns of development, given the huge increase in the country's population and workforce every year.