UNTAMED INFLATION

The Reserve Bank of India (RBI) seems to have its back to the wall. Despite hiking int­erest rates multiple times this year, inflation has shown no signs of easing, with retail inf­lation, measured by the consumer price index (CPI), touching 7.4 per cent in September. This is the ninth month in a row—or three quarters—that inflation has breached the RBI’s 6 per cent upper range limit. The RBI is now duty ­bound to give the Centre an explanation. But can it really do anything to ease the pressure? Perhaps not, say experts. Worse, rate hikes inevitably hurt growth. The International Monetary Fund has already cut India’s 2022-­23 GDP growth projection to 6.8 per cent from its 7.4 per cent esti­ mate in July, while the World Bank revised its forecast to 6.5 per cent from the earlier 7.5 per cent estimate.

- M.G. Arun

With the Russia-Ukraine war still raging, various agencies predict more trouble for the global economy and India.

Food and fuel prices have been major contributors to the high inflation. Food and beverages inflation was 8.4 per cent in September, with vegetables showing 18.05 per cent inflation, spices 16.9 per cent and cereals 11.5 per cent. Weather extremities have been cited as a reason for the high food prices. A heat wave across north India in March hit the wheat crop, and despite a ban on its export, prices have risen 19 per cent. Data from the Food Corporation of India shows that India’s wheat inventory, at 22.75 million tonnes as on October 1, has plumbed a six-year low. Moreover, the monsoon has not been uniform across the country. Rice production this year, say experts, could be 6 per cent less than last year. The government will have to procure rice aggressively for the free food programme that will continue till December. This could lead to a shortage in the open market, pushing prices up.