Prices of crude oil in the global market could have an impact on retail inflation. The inflation is now rising after reaching a minimum of 1.46 percent in June and considering this, the Reserve Bank can keep the policy rate at least for some time in 2018.   

Apart from the global oil price, the recommendations of the Seventh Pay Commission recommendations, including housing allowance, can be fully compounded by the pressure on prices. Industry experts and economists believe that retail inflation may average 4 to 4.5 percent next year. In the year 2017, it was between 1.46 to 4.88 percent. 

Retail inflation has a direct impact on the general public and the Reserve Bank makes it the mainstay in the monetary policy review. Retail inflation based on Consumer Price Index (CPI) rose to a minimum of 1.46 percent in June, which was higher at 8.88 percent in November. 

Considering the strong global oil prices and the uncertainty of Kharif crop production, the Reserve Bank has also increased the inflation forecast from 4.2 to 4.6 percent till March 2018. The central bank has set a target of retail inflation of 4 percent with two percent reduction. 

If inflation is based on the wholesale price index, then it is within the range of 0.90 to 6.55 percent in 2017. The wholesale inflation rate remained between 5.25 to 6.55 percent in the first three months and between 0.90 to 1.88 percent in the middle of the year. It was 3.93 percent in October.   

This trend of inflation has given the government some relief this year. However, next year it may increase because the import bill is expected to increase by purchasing crude oil. Soumya Kanti Ghosh, Chief Economist of SBI Research, said that inflation is now rising above this level but will remain within the 5 percent limit. 

He said, "Inflation figures can be between 4 to 4.5 percent in the next one or two months. However, it was 3.5 to 3.7 percent in the current financial year but the inflation could go up to 4.5 percent in the next year." Ghosh said

"If this is also 5 percent, then the RBI's inflation target will be within the range of 4 to 6 percent. Crude oil costs 65 dollars per barrel, and this could be the main reason for the rise in inflation." Sunil Sinha, chief economist at India Ratings, said that with the weakening of the comparative base, the inflation rate may increase rapidly next year. 

He said, "In contrast, unlike last year, the price of food items such as veg was not low. If this situation continues and the prices of food items continue to rise, inflation will increase. Apart from this, prices of crude oil may be under pressure from prices. "Looking at this, the experts are of the opinion that the Reserve Bank can keep policy rates at least for some time next year.  

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