Policymakers in a quandary as inflation looks far from ebbing
Live MintRekha Jadhav, 52, a vegetable vendor in Navi Mumbai’s Kharghar, used to make ₹7,000 a day till last December. With demand strengthening and some households having greater visibility on their income outlook, inflation expectations are expected to remain high,” said Aditi Nayar, principal economist, ICRA Ltd. India’s retail inflation based on the Consumer Price Index hit a nearly six-and-a-half-year high of 7.6% in October, with food inflation registering a steep rise. According to the survey findings, while economic recovery will continue to remain the cornerstone of the central bank’s monetary policy focus for the foreseeable future, high inflation, which has hovered at the 6% mark, will likely outweigh other concerns in the upcoming policy review. “Given that consumption is so critical for revival of Indian economy and that the pandemic has resulted in job losses and income destruction, high inflation is the last thing households want,” said Crisil Research in a 13 November note. If it is assumed that retail inflation goes up by 1 percentage point, overall private final consumption expenditure increases by ₹1.23 trillion to consume the same basket of goods and services.