Business Desk, Tech for FTCP, New Delhi
Updated Sun, 13 Sep 2020 02:49 PM IST
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Retail inflation has increased mainly due to increase in prices of vegetables, pulses, meat and fish. However, WPI inflation declined by 0.58 per cent in July. Subramaniam said that if you look at inflation, it is mainly due to supply side problems. However, these barriers will be overcome after the local lockdown is relaxed.
Subramanian told that overall wholesale and retail inflation is due to supply side factors. These problems will be overcome further. In such a situation, retail inflation will also soften. It is expected that retail inflation will remain at an elevated level for the rest of the year. With this, the Reserve Bank will no longer have room for policy rate cuts.
The six-member Monetary Policy Committee (MPC), headed by Reserve Bank Governor Shaktikanta Das, has been given a target to keep annual retail inflation at four percent (up or down two percent) by March 31, 2021. However, so far retail inflation has remained within the comfort zone of the Reserve Bank.
It has crossed it only in July. Retail inflation stood at 6.09 percent in June. On the other hand, wholesale price index-based inflation was at minus 1.81 percent in June. It was minus 3.37 percent in May and minus 1.57 percent in April.