Inflation To Hurt Common Man: In the current financial year 2022-23, the Reserve Bank of India has projected the retail inflation rate to be 5.7 percent. Whereas last year in 2021-22 this estimate was 4.5 percent. In February 2022, the retail inflation rate has been 6.07 percent, which is more than the limit set by the RBI. This figure of retail inflation is at the highest level of 8 months. On top of that, due to the war between Russia and Ukraine, the impact of inflation on the common people can be deepened. This is where the concern is haunting the RBI. The RBI governor has also clearly indicated that now RBI will try to control inflation through monetary policy. That is, the priority will now be to reduce inflation as compared to growth.
And inflation can hurt
On February 24, Russia attacked Ukraine. After which the supply of many commodities got disrupted. Then Western countries imposed many types of economic sanctions on Russia. The effect of war and sanctions was that at one time the price of crude oil went beyond $140 per barrel. However, it has declined and now it is trading close to $100 a barrel. However, its effect was that in 17 days, the price of petrol and diesel has increased by Rs 10 per liter. Due to the increase in the price of natural gas in the international market, the central government has doubled the prices of domestic gas, due to which CNG-PNG is becoming expensive, due to which transportation to cooking has become expensive. After the attack on Ukraine, edible oil has become expensive by taking wheat. So the prices of steel, aluminum, and other commodities are increasing for the industries. Due to which inflation has started increasing and if the war on it is prolonged, inflation can be more troubling, it is expected to increase further in future.
Will the loan be expensive?
According to RBI, inflation is expected to be 6.3 per cent in the first quarter of 2022-23, 5 per cent in the second quarter, 5.3 per cent in the third quarter and 5.1 per cent in the fourth quarter. The rise in inflation has a direct effect on interest rates. Despite the Corona epidemic, the Indian economy made a fast recovery, so it has a very cheap loan, due to which the demand for homes, consumer durables, cars and SUVs increased in the country, which directly benefited the economy. After the lockdown, it helped in providing employment to the people. But if retail inflation rises, debt will also be costlier due to this, which can have an adverse effect on the economy. This is the reason why RBI’s focus is going to be more on controlling inflation than on accelerating economic growth.