Inflation Stability Amid Economic Challenges

Retail inflation in India, guided by RBI, is projected to stabilize at 4.5% in 2024-25, reaching consistent targets by 2025-26. RBI Deputy Governor Michael Patra highlighted India's unique challenges due to food and fuel shocks, emphasizing coordinated monetary and fiscal policy to maintain economic stability.

Retail inflation in India is forecasted to average 4.5% in the 2024-25 period, as outlined by RBI Deputy Governor Michael Debabrata Patra. He spoke at the High-Level Conference, emphasizing the Indian economy's unique challenges from repeated shocks in food and fuel prices.

The Reserve Bank of India has been tasked by the government to maintain the consumer price index-based retail inflation at 4%, with a tolerance band of +/- 2%. Inflations levels have remained below 6% for the past three months, suggesting progress towards this goal.

Patra noted that the future will test inflation targeting-based monetary policies due to threats like climate change causing supply shocks. He called for robust and nimble policy frameworks, leveraging fiscal and structural strategies to withstand these challenges.

(With inputs from agencies.)