India's Inflation Remains High, But Growth Prospects Positive, Says RBI Bulletin

According to the RBI March Bulletin, consumer price inflation in India remains high and core inflation continues to defy the distinct softening of input costs. The headline retail inflation moderated to 6.44 per cent in February 2023 from 6.52 per cent in January.

Retail inflation in India fell marginally but remained above RBI's 6 per cent upper tolerance band for the second straight month in February 2023, with the Consumer Price Index pegged at 6.44 per cent. In January, the retail inflation was 6.52 per cent.

India's retail inflation was above RBI's 6 per cent target for three consecutive quarters and had managed to fall back to the RBI's comfort zone only in November 2022.

The RBI, in its monthly bulletin, pointed out that a silver lining, stating that India has emerged from the pandemic years stronger than initially thought.

On the supply side too, the RBI bulletin said India's agriculture sector is into a seasonal uptick, whereas industry is emerging out of earlier contraction and services have maintained momentum as well.

Even as global growth is set to slow down or even enter a recession in 2023 as global financial markets wager, India has emerged from the pandemic years stronger than initially thought, the report said. The central bank's nowcast of real GDP growth for the fourth quarter of the current 2022/23 year stands at 5.3 per cent.

India's economy grew by 4.4 per cent in the third quarter and is expected to expand by 7 per cent for the fiscal year ending March after recording a growth of 9.1 per cent in 2021-22.

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