New Delhi, 13th May 2023: The Reserve Bank of India has had to raise interest rates during the past year due to global headwinds, rate increases by the US Federal Reserve, and most crucially, the need for control.
Although the RBI kept rate increases below the general trend, they increased the cost of borrowing and kept inflation above the RBI’s tolerance ceiling of 6% for the majority of the months.
Retail inflation in India fell to 4.7% in April, its lowest level in 18 months.
This is also the second consecutive month that inflation has not exceeded the RBI’s cap, giving the latter space to postpone further increases in repo rates in the short term.
Retail inflation decreased from 5.66% to 4.7%, but the decline was mostly due to a decline in food inflation, which fell to 3.8% in April.
Since food expenses account for a significant portion of household spending in India, they are given a 54% weighting for determining the inflation rate overall.
Even while the cost of milk and pulses increased, lowering vegetable prices helped to reduce inflation.