Retail inflation moderates to 5.66% in March from 6.44% in February

India’s Annual Retail Inflation for March Eases Below Central Bank’s Tolerance Level for the First Time in 2023. According to the NSO data, India’s annual retail inflation for March eased to 5.66% from 6.44% in February. This is a positive development for the economy, as it indicates that inflationary pressures may be easing. The central bank’s upper tolerance level for inflation is 6%, so the current rate is below this level, which is a welcome change.

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RBI’s Approach to Tackle the Inflation:

The central bank has raised the benchmark repurchase rate by a total of 250 basis points since May 2022 in an attempt to control rising prices.

The RBI had previously estimated the average annual retail inflation for the last fiscal year to be 6.5%. Despite concerns about core inflation, which remains above 6% when excluding volatile food and fuel prices, the Monetary Policy Committee, led by Governor Shaktikanta Das, surprised many by announcing that they would maintain the policy rate at 6.5%. Additionally, the MPC revised down their forecast for CPI inflation from 5.3% to 5.2%.

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