Inflation to stay below RBI’s target of 4%: Economic Survey
New Delhi: Signalling price stability, the Economic Survey-II on Friday said retail inflation at the end of March 2018 will remain within Reserve Bank of India’s (RBI) medium term target of 4%.
In a first, the government on Friday presented second or mid-year Economic Survey for 2016-17, highlighting newer factors the economy faces.
The survey said that current inflation running well below the 4% target suggests that inflation by March 2018 is likely to come in below the RBI’s medium term goal of 4%. It dubbed the current low level of inflation “a historic moment”, instilling confidence in price stability.
According to the Survey, CPI inflation declined to 4.5% during 2016-17, with a broad-based price decline in all major commodity groups. It has been below 4% for the past eight months. It noted that the economy underwent a transition—possibly, structural and permanent—from high to low inflation in the last three years.
“Significant moderation in CPI headline inflation during the last three years. CPI inflation fell to a series low of 1.5% in June 2017,” the survey noted.
Noting that most states and UTs saw a sharp decline in CPI inflation in 2016-17 compared with the previous year, the document stated, “Both rural and urban inflation declined in 2016-17 and the gap between rural and urban inflation has narrowed in recent months.”
In sum, the survey pointed out that geo-political risks are simply not as risky as earlier. “Technology has rendered India less susceptible to the vicissitudes of geo-economics (OPEC) and geo-politics (the Middle-East),” it added.
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