Retail inflation came down to 6.44% in the month of February: Minor relief due to low prices of pulses, rice, and vegetables, it was 6.52% in January

Retail inflation in the country has come down to 6.44% in the month of February. In January 2023, it was at a three-month high of 6.52%, and in December 2022 at 5.72%. Three months ago in November 2022, retail inflation was 5.88%. Last year in February 2022 it was 6.07%.

Slight relief due to low prices of pulses, rice, and vegetables

There has been a slight increase in food items. On the other hand, there has been a slight decrease in the prices of pulses, rice, and vegetables, due to which there has been a slight decline in the inflation rate. Food inflation has gone up to 5.95% in February 2023, which was 5.94% in January.

Inflation above RBI's upper tolerance level for the second consecutive month

Inflation has remained above the Reserve Bank of India's (RBI) upper tolerance level of 6% for the second consecutive month. Food items account for about half of the Consumer Price Index (CPI) basket. In the last month, the prices of food grains like wheat have decreased in the international and domestic markets. The government has also increased the supply. This has also affected the retail inflation figures.

In bad weather, a fall in the rupee can be seen

Societe Generale economist Kunal Kundu said that inflation is not likely to increase much for the next few quarters. But the pace of its reduction will be slow. The effect of the more than 10% fall in the rupee last year can also be seen in inflation.

There is no possibility of laxity in the strict policy of the Reserve Bank

Barring food items and energy, there is currently no visible decline in core inflation. According to economists, it will remain above the limit of 6% in February. Due to this, there is no possibility of laxity in the monetary policy of RBI. Interest rates may increase further.

How does inflation affect?

Inflation is directly related to purchasing power. For example, if the inflation rate is 7%, then Rs 100 earned will be worth only Rs 93. That's why investing should be done keeping this in mind inflation. Otherwise, the value for your money will decrease.

How does inflation increase or decrease?

The rise and occurrence of inflation depend on the demand and supply of the product. If people have more money, they will buy more things. Buying more things will increase the demand for things and if there is no supply according to the demand, the price of these things will increase.

In this way, the market becomes vulnerable to inflation. Simply put, an excessive flow of money in the market or a shortage of goods causes inflation. On the other hand, if the demand is less and the supply is more, then the inflation will be less.

How does RBI control inflation?

To reduce inflation, the flow of money (liquidity) in the market is reduced. For this, the Reserve Bank of India (RBI) increases the repo rate. Worried about rising inflation, RBI has recently increased the repo rate by 0.25%. Due to this the repo rate has increased from 6.25% to 6.50%.

What is CPI?

Many economies around the world consider WPI (Wholesale Price Index) as their basis for measuring inflation. This does not happen in India. In our country, along with WPI, CPI is also considered as a scale to check inflation.

The Reserve Bank of India considers retail inflation, not wholesale prices, as the main standard for setting monetary and credit-related policies. WPI and CPI affect each other in the nature of the economy. In this way, if WPI increases, then CPI will also increase.

How is the retail inflation rate determined?

Apart from crude oil, and commodity prices manufactured cost, there are many other factors that play an important role in determining the retail inflation rate. There are about 299 items on the basis of whose prices the rate of retail inflation is fixed.

(ASHNA )