High inflation is mainly a consequence of exogenous price shocks

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Controlling Inflation: Inflation also affects demand history. In the coming days, it may turn out to be negative for the economy.

Inflation factors in India: Inflation is a big problem in India these days. The country is facing high inflation, which also affects the history of demand. In the coming days, it may turn out to be negative for the economy. The RBI blamed external factors for inflation in the country. Shashank Bhide, a member of the Reserve Bank of India (RBI) Monetary Policy Committee, said that the inflation rate has remained high for the past three quarters due to external pressure on prices.

A member of the Monetary Policy Committee said policy action would be needed to fight inflation. Bhide said the pressure is very high and preparing a roadmap to fight inflation in India is also like a tough test. He told the news agency that inflation remained at a high level in the second quarter of 2022-2023. Earlier in two quarters, it was also at high levels.

Energy and food are expensive

High fuel and food prices and their impact on other sectors keep inflation high. Retail inflation based on the consumer price index (CPI) has remained above 6% since January 2022. In September it was 7.41%. The Monetary Policy Committee pays special attention to inflation in all RBI monetary policy decisions.

Impact on consumption and investment demand

Bhide said that the reason for this situation is the pressure of external factors on prices. At the same time, steps must be taken to limit its impact on the rest of the economy. Addressing these challenges will require political efforts, improved monetary policy, and other economic policies. He said that the purpose of the monetary tightening of the RBI is to reduce inflationary pressures. Because keeping inflation at a high level has a negative impact on consumer and investment demand.

Why the Central Bank failed to reduce inflation?

The Reserve Bank Monetary Policy Committee will hold an extraordinary meeting on November 3rd. In fact, the RBI should report to the government why it has failed to keep retail inflation below its 6% target for three straight quarters since January. The 6-member MPC, led by RBI Governor Shaktikanta Das, will prepare this report outlining the reasons for not meeting the inflation target.

What measures have been taken to reduce prices?

In addition, it will also be told what measures were taken by the central bank to reduce prices in the country. Regarding the current macroeconomic situation in India, Bhide said the risk comes from an uncertain global environment. However, GDP growth in the current fiscal year is estimated at around 7 percent.



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