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MUMBAI : Inflation has peaked in April this year and the momentum is expected to come down as per projection, said Reserve Bank of India in its August bulletin on Thursday.

In an article titled ‘State of the Economy’, RBI said that inflation has edged down, but its persistence at elevated levels warrants appropriate policy responses to anchor expectations. RBI said that the conduct of monetary policy in India is now oriented completely to bringing down inflation from unconscionably high levels as its priority.

With this aim of taming inflation, RBI has been increasing policy rates since May this year, with a cumulative rate hike of 140 basis points being done so far. The impact of these consecutive rate hikes may have been visible in the July inflation number which fell to 6.71% in July from 9.1% in June.

“Perhaps the most heartening development in recent times has been the easing of inflation in July 2022 by 30 basis points from June 2022 and an appreciable 60 basis points from the average of 7.3% for Q1:2022-23. This has validated our hypothesis that inflation peaked in April 2022. For the rest of the year, the RBI’s projections scent a steady easing of the momentum of price changes," said the report.

That said the bulletin noted that the task before the RBI’s Monetary Policy Committee (MPC) would be to guide inflation to its target of 4% after Q1 FY24.

“Fortuitously, base effects are favourable all through. If these expectations hold, inflation will fall from 7 to 5% in Q1 next financial year - within the tolerance band, hovering closer to the target, but not yet positioned for landing. This is a decisive point in its trajectory," it said.


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