Why easing inflation can’t offer relief, yet
SummaryThe ‘winter disinflation’ is unlikely to sway the MPC towards pausing repo rate hikes just yet — and for good reason.
India’s retail inflation, after staying above the Reserve Bank of India’s (RBI’s) upper limit of 6% for 10 months, finally fell within the range in November, led by a sharp decline in vegetable prices and a favourable base effect. The 5.88% print most likely marks the beginning of a string of months when inflation will be around or below 6%. The past five years’ trend for this time of the year could even take the inflation rate towards the medium-term target of 4% by March 2023, Mint calculations show.