CHENNAI: The State Bank of India (SBI) projects that India's inflation rate would be about 5% by March 2023. The 7.01 percent consumer price index (CPI) inflation reported by the Indian government on Tuesday for June 2022 demonstrates that the highest point has passed, as per reserach report from SBI.
Inflation of the CPI related to supply-side factors began to increase after September 21 while demand-led CPI remained roughly stable, according to the SBI study. However, supply-led CPI inflation has remained mild while demand-led CPI inflation has slightly increased in recent months, according to the SBI.
However, the research noted that despite the obvious downward trend in inflation that can be attributed to supply-side issues, the RBI may not need to hike rates anymore. Since peaking in April, core inflation has been trending downward (taking last 12-months as reference period).
The moderation is due to a decrease in the contribution of transport and communication, which rose from 1.7% in April to 1.1% in June. The decline in core CPI is mostly the result of a decline in demand brought on by the lingering effects of recent high inflation. More correction in prices of precious metal around April has contributed to correction in personal care and effect.
On the Index of Industrial Production (IIP) that indicated about 20 percent growth, the bad news is that in Q1FY23, new investment announcement declined by about 27 percent to Rs 4.35 lakh crore as compared to Rs 5.99 lakh crore in Q1FY22 and Rs 5.75 lakh crore in Q4FY22, the SBI said.
Centre watchful of price situation pointed attack on inflation: FM
Retail inflation drops slightly in June to 7.01 pc
Inflation likely to ease in the second half of 2022-23: RBI