4%-plus inflation for 5 yrs leaves bitter taste

Inflation may be on a downtrend, but urban households still expect it to be high for the foreseeable future.

- Deepa Vasudevan

In October 2019, India's retail inflation exceeded the 4% official midpoint target set by the Reserve Bank of India (RBI), and has remained there for all but two months in 2024. The latest inflation number for October exceeds even the RBI's upper tolerance limit of 6%, setting off fresh alarm bells. Markets are focused on how monetary policy will react and whether this will delay interest rate cuts.

High prices are the legacy of inflation, and they impact the psyche of consumers. Ordinary households are concerned about the prevailing prices of what they buy rather than the inflation rate measured as a statistic. The reality is, prolonged inflation means prices are high by previous standards even when the rate itself has slowed down.