‘Normal monsoon, interest rate cut key to bringing down inflation by year end’

| | New Delhi
  • 0

‘Normal monsoon, interest rate cut key to bringing down inflation by year end’

Monday, 20 June 2022 | PTI | New Delhi

A combination of normal rainfalls aiding bumper agriculture output and the Reserve Bank of India (RBI) further hiking interest rates to cut easy money in the system hold key to bringing down multi-year high inflation triggered by surging food and fuel prices, economists said.

Although the Government has room to further reduce excise duty on petroleum products to contain inflation from the fiscal side, emphasis will be on monetary policy to control price pressures, they added.

While retail inflation rose 7.04 per cent in May year-on-year, slightly down from 95-month high of 7.79 per cent in April, wholesale or WPI inflation rose to a record high of 15.88 per cent in May. Three-fourth of the price rise is coming from food items and a normal monsoon will help cool it down as it will boost production and replenish stockpiles.

The RBI has already raised interest rates by 90 basis points after inflation remained above its 2-6 per cent target band for a fifth straight month and is expected to hike interest rates by another 80 bps, they said.

For the common man, the price hike is drilling a hole in pocket.

Edible oil prices, which had been a major factor contributing to the inflation, have started to ease a bit with leading players announcing some reduction.

“Petrol and diesel have become expensive but, in comparison, cab fares have not been raised that much. We have to pay cab companies also. We are left with quite a little,” Sukhwinder Singh, a 47-year-old cab driver said.

A 40-year old vegetable seller said managing two meals a day has become difficult as people opt for home deliveries rather than buying from vegetable vendors. “Medicines are becoming expensive. We cannot even afford to fall sick these days.”

Economic affairs secretary Ajay Seth on June 16 said inflation in India is mainly because of high energy and food prices and hoped that it would moderate in the coming months. “We are all aware that summer months are difficult months in terms of vegetables and other items,” he said. “High crude prices are certainly a challenge and whatever measures are needed and feasible are being taken.”  

Sunday Edition

CAA PASSPORT TO FREEDOM

24 March 2024 | Kumar Chellappan | Agenda

CHENNAI EXPRESS IN GURUGRAM

24 March 2024 | Pawan Soni | Agenda

The Way of Bengal

24 March 2024 | Shobori Ganguli | Agenda

The Pizza Philosopher

24 March 2024 | Shobori Ganguli | Agenda

Astroturf | Lord Shiva calls for all-inclusiveness

24 March 2024 | Bharat Bhushan Padmadeo | Agenda

Interconnected narrative l Forest conservation l Agriculture l Food security

24 March 2024 | BKP Sinha/ Arvind K jha | Agenda