Slight relief from inflation in India

In India, the average person saw a small reduction in inflation in June. According to official data released on Tuesday, retail inflation based on the Consumer Price Index (CPI) fell to 7.01 percent in June. It was 7.04 percent in May. The inflation rate has now exceeded the RBI’s 6 percent maximum limit for six months running. The retail inflation rate in January 2022 was 6.01 percent.In February, it was 6.07 percent, 6.95 percent in March, and 7.95 percent in April.

Inflation Rate

In June, food inflation, also known as overall inflation, was 7.75 percent. The percentage for May was 7.97%. It was 8.38 percent in April. In June, vegetable inflation reached 17.37 percent. The cost of living index increased by 10.39 percent in June.It was 9.54 percent in May. Reduced excise taxes on gasoline and diesel, as well as limits on food exports, are attributed to the decline in inflation.

In what ways does the RBI manage inflation?

Excessive market liquidity is removed to lower inflation. The repo rate was raised by the Reserve Bank of India (RBI). The RBI recently raised the repo rate by 0.50 percent due to mounting inflation concerns. As a result, the repo rate increased from 4.40 percent to 4.90 percent.

Describe WPI & CPI?

The Consumer Price Index (CPI) and the Wholesale Price Index (WPI) are two widely used indicators that accurately pinpoint the level of inflation in a certain nation. The WPI, or wholesale pricing index, is a tool used to track price changes for commodities that are offered for wholesale in the marketplace.

The WPI (Wholesale Price Index) is the basis for gauging inflation in many nations’ economies. India does not experience this. In our nation, the CPI is also used as a gauge to monitor inflation along with the WPI.

Instead of using wholesale pricing as its primary benchmark, the Reserve Bank of India uses retail inflation to determine its monetary and credit-related policies. The character of the economy is influenced by both the WPI and the CPI. The CPI will rise as a result of the WPI rising in this manner.

How is the retail inflation rate calculated?

The cost of manufacturing, commodity prices, and crude oil are only a few of the many variables that greatly influence the retail inflation rate. These products, whose prices determine the rate of retail inflation, number more than 250.

The buying power is directly correlated with inflation. For instance, if inflation is 7%, then a salary of Rs 100 would only be worth Rs 93. As a result, one should invest while considering inflation. It’s probable that your money will lose some of its worth. With the exception of Russia and Brazil, interest rates are currently negative in practically every nation. A negative interest rate indicates that the interest earned on fixed deposits is less than the rate of inflation.

The supply and demand for a product determine whether inflation rises or falls. People would purchase more goods if they had more money. The demand for goods will rise as more people buy more of them. These items will cost more if supply and demand are out of balance. The market is made more susceptible to inflation in this way. Inflation is brought on by an excessive money supply or a shortage of goods. Inflation will be low if supply is strong and demand is low.