The heat of inflation has now started scorching the decisions of the Reserve Bank of India (RBI). In the midst of the Russia-Ukraine War, the pressure of inflation has increased so much that even the RBI may be forced to increase its interest rates next month.
Anant Narayan, Senior Analyst of the Economic Advisory Firm, says that although the RBI has estimated the retail inflation rate to be 4.5 percent for 2022-23, but looking at the current situation, it is certain that this year the retail inflation rate will be 6 percent. living above. Not only this, it has gone out of the RBI’s fixed 6 percent limit in January itself.
Loan may be expensive next month
Economists say that the burden of inflation has increased so much on the RBI that the Monetary Policy Committee (MPC) meeting to be held in April can increase the repo rate. RBI has not made any change in its rates for the last two years, which are currently running at a low of 22 years. If there is an increase in the repo rate, then the EMI of your loan will definitely increase.
Reserve Bank facing double challenge
Economists say that the biggest reason for inflation may be crude, but it is not alone. Rising prices of metals in edible oil and commodities are also continuously provoking inflation.
What is the meaning of crude oil?
SBI (State Bank of India) Economist Soumya Kanti Ghosh says that with the increase in the prices of petrol, diesel and LPG by 10, the retail inflation rate will increase by 50-60 basis points. Since the price of crude has more than doubled since last year, now the fuel will definitely be expensive. India imports 85 percent of its crude oil, the burden of which is bound to come in the form of inflation.
Cooking oil is also fueling inflation
There is a big challenge before the RBI to stop the inflation rate of food items. Due to the impact on supplies from Russia and Ukraine, sunflower oil has become expensive by up to Rs 25 per liter. The demand for palm is also increasing due to which the rates in the global market have gone to record levels. Since, here also India meets 60 percent of its requirement from imports, then it is bound to be affected by global prices. It is clear that this will increase the inflation rate further while the Reserve Bank will also be forced to increase the repo rate.
The ever-increasing prices of metals and essentials
The rates of commodities are increasing continuously in the global market. On Monday itself, aluminum futures on the London Exchange rose 10 percent to $242 a tonne, while nickel rose 12.5 percent to $2,250 a tonne. Its effect will be visible on real estate and other infra projects. Apart from this, the price of essential products like milk has also increased by Rs 2 a liter.
Governor has also indicated
RBI Governor Shaktikanta Das had said last Friday, ‘We will make the strategy ahead only after looking at the growth rate and inflation.’ The growth rate is also expected to slow down by 0.60 percent due to expensive crude. Estimates. In such a situation, there is every possibility that the policy interest rates can be increased next month.