By March, India's inflation rate could drop to 5%, according to an SBI Report

14 Jul 2022 , 09:19 AM

According to the State Bank of India research report Ecowrap's most recent release, the likelihood of a global recession is only 20—30%, and the likelihood of an extended period of stagflation in the economy is higher. This report also predicted that India's inflation rate would approach 5% by March 2023.

"The concern is that spiraling inflation and a monetary tightening cycle may trigger a recession, especially in the US economy. But the worry is baseless, "It read.

Retail inflation in India exceeded the Reserve Bank of India's upper tolerance band of 6% in June for the sixth month running. In June, the retail inflation rate was 7.01%.

"Due to a minor easing in food inflation, the CPI increased only slightly from 7.04% in May 2022 to 7.01% in June 2022. Now that the June data has proven that the peak had gone, "said the study.

The government's many actions, including the reduction of taxes on gasoline and diesel, the restrictions placed on food exports, and the reduction in cement costs amid a global breakdown in commodity prices, have allowed for the stabilization of inflation during the previous two months.

High inflation has been a disturbing trend globally as a result of supply and demand-side issues.

"Food and home goods like dishes and linens are two categories that frequently suffer supply-driven price swings. Mobile phones, electricity, and products related to motor vehicles are among the categories where price adjustments are frequently influenced by demand."

The additional impact of GST rate increases on retail inflation will only be in the range of 15-20 basis points, it said, as several goods and services will cost more starting on July 18 as a result of the Goods and Services Tax (GST) Council's approval of a rate increase and the withdrawal of tax exemptions on some items.

Any increase in GST rates, according to the government, is meant to make up for "inefficiencies" in the value chain.