India’s inflation rate jumps above 6.5 percent

New Delhi, Feb 13 (EFE).- India’s consumer price index stood at 6.52 percent in January – after showing a downward trend for two months – rising two percentage points above the tolerance band fixed by the Reserve Bank of India, authorities said on Monday.

Food inflation – which accounts for around 40 percent of the products covered by the CPI – is one of the main reasons behind the rise, as it rose from 4.19 percent in December to 5.94 percent in January, as per provisional estimates released by the ministry of statistics.

The prices of cereals, eggs and milk registered the biggest spikes – of up to 16 percent – according to the year-on-year data provided by the ministry.

This is the biggest price-rise since October, when the CPI stood at 6.77 percent.

The surge took India’s inflation rate outside the tolerance band of 2-6 percent fixed by the RBI for the current fiscal year, set to end in March.

Last week the RBI raised its key lending rate for the sixth time in a row – hiking it by 25 base points to 6.5 percent – aiming to control inflation in the next fiscal year.

Overall, the central bank has raised the lending rate by 250 base points, as it aims to move ahead from the accommodative ecomonic policies enforced during the pandemic.

India is aiming to keep inflation below 4 percent, with a tolerance band of 2 percent, and RBI authorities have been positive about being able to achieve the goal, based on the evidence of the price-rise slowing down over the past two months.

The RBI projects a 6.4 percent economic growth for India during the financial year 2023-2034, with the biggest spurt of 7.8 percent expected in the first quarter, followed by 6.2 percent in the second quarter, 6.0 percent in the third and 5.8 percent in the last quarter. EFE

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